uploads///Manufacturing

Revenues Expand for McLane, Fall for Manufacturing

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Nov. 12 2015, Updated 8:06 a.m. ET

Manufacturing business

Berkshire Hathaway’s (BRK-B) manufacturing business reported revenues of $9.1 billion as compared to $9.5 billion in the prior year’s quarter. The division reported earnings before taxes of $1.26 billion as compared to $1.34 billion in the prior year’s quarter. The division generates more profitability on average than the company overall.

Berkshire Hathaway’s subsidiaries are engaged in industrials (VIS), building products, and apparel businesses. They manufacture industrial and end-user products. This includes:

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  • Lubrizol – a specialty chemical manufacturer
  • IMC International Metalworking Companies – an industry leader in the metal-cutting tools business with worldwide operations
  • Forest River – a leading manufacturer of leisure vehicles
  • CTB – a manufacturer of equipment and systems for the livestock and agricultural industries

Warren Buffet added Precision Castparts (PCP) for about $32 billion to the manufacturing portfolio. The acquisition is expected to be completed in 2016. Berkshire Hathaway’s main strategy is to acquire businesses for its subsidiaries to expand or add value to them.

McLane

Berkshire Hathaway reported revenues of $12.3 billion and profits of $106 million for McLane in 3Q15 as compared to $12.2 billion and $120 million, respectively, in the prior year’s quarter. The revenues expanded on the food service and beverage operations. Berkshire Hathaway (BRK-B) acquired McLane from Walmart (WMT) for $1.5 billion in 2003. It’s the company’s single-largest non-insurance business.

McLane operates a wholesale distribution business that provides grocery and non-food products to retailers, convenience stores, and restaurants. The company also operates as a wholesale distributor of distilled spirits, wine, and beer. Its clientele include Walmart, 7-Eleven, and Yum! Brands (YUM).

McLane is a high-volume and low-margin business. In 2012, it acquired the Meadowbrook Meat Company, a large food service distributor for national restaurant chains.

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