Warren Buffet 390 (R).
(photo credit: Lucas Jackson / Reuters)
Warren Buffett heaped praise on Iscar Ltd. (IMC Metalworking Companies),
calling it one of “the fabulous five” in his annual letter to Berkshire Hathaway
Inc. shareholders, published as part of the company’s financial report for
“Iscar, our 80%-owned cutting-tools operation, continues to amaze
us,” he wrote.
“Its sales growth and overall performance are unique in
its industry,” Buffett wrote. “Iscar’s managers – Eitan Wertheimer, Jacob Harpaz
and Danny Goldman – are brilliant strategists and operators. When the economic
world was cratering in November 2008, they stepped up to buy Tungaloy, a leading
Japanese cutting-tool manufacturer.
Tungaloy suffered significant damage
when the tsunami hit north of Tokyo last spring.
But you wouldn’t know
that now: Tungaloy went on to set a sales record in 2011. I visited the Iwaki
plant in November and was inspired by the dedication and enthusiasm of
Tungaloy’s management, as well as its staff. They are a wonderful group and
deserve your admiration and thanks.”
Iscar is one of Berkshire’s five
largest non-insurance companies, alongside railroad Burlington Northern Santa Fe
Corporation, Lubrizol Corporation, Marmon Group, and MidAmerican Energy Holdings
Inc., which delivered record operating earnings. Their aggregate revenue was $9
billion pretax revenue in 2011.
“Unless the economy weakens in 2012, each
of our fabulous five should again set a record, with aggregate earnings
comfortably topping $10 billion,” Buffett wrote.
In the review of
Berkshire’s manufacturing operations, of which Iscar is a part, Buffett said
Iscar saw strong demand for its products. The company helped drive the 11
percent increase in the manufacturing activities’ $17.7b. revenue in 2010, along
with Forest River, CTB and Johns Manville. Iscar had 11,067 employees at the end
Berkshire paid $4b. for 80% of Iscar from the Wertheimer family
in 2006. It acquired MidAmerican in 2000, Marmon in 2008, Burlington Northern
Santa Fe in 2010 and Lubrizol for $98b. in 2011.