BYD Signs SkyRail Agreement for São Paulo, Brazil

BYD SkyRail São Paulo and São Paulo Metro formally signed a contract on April 27th for BYD to provide its SkyRail for the Line 17 (Gold Line) project.

This marks BYD’s second major collaborative project in Brazil following the company’s SkyRail line in the city of Salvador.

As the provider of this integrated solution, BYD will provide Line 17 with an entire suite of products and services, including 14 fleets of 5-vehicle trains, switches, conductive rails, UTO-level signal system, central control system, engineering vehicles, vehicle washing machines, and technical services, including engineering integration, installation, debugging and training.

Designed to solve urban traffic congestion, BYD’s SkyRail is a straddle-type monorail system with an investment of 5 billion RMB, developed by a dedicated R&D team of more than 1,000 following five years of research and development. The SkyRail brings lower costs, a shorter construction period and greater terrain adaptability when compared to competing technologies, while also being energy efficient, emitting zero emissions and operating quietly.

The first phase of the Line 17 project will extend from São Paulo’s Congonhas Airport to other central parts of the city, connecting vital business districts, the University of São Paulo, and densely populated areas in the city’s east. With a total length of 17.7 kilometers upon completion, the Gold Line will connect with Line 1 (Blue), Line 4 (Yellow), Line 5 (Lilac), and Line 9 (Emerald).

According to Tyler Li, Country Manager of BYD Brazil, Line 17 is designed to reach a daily flow of 250,000 passengers, and the interval between departures can be as rapid as 80 seconds. As such, these parameters necessitate high requirements for the project’s technology and operations system.

As the largest city in South America, São Paulo is both Brazil’s vibrant economic center and a critical logistics hub. Congonhas Airport, as one of the three major commercial airports in the city, became the second busiest airport in Brazil with nearly 187,000 flights and 13.67 million passengers in 2008. Due to its location in central São Paulo, the high volume of passengers and the density of vehicles in the area often contribute to severe road congestion. The completion of Line 17 is expected to significantly alleviate the pressure on road traffic between Congonhas Airport and other sections of the city.

On January 3, 2020, BYD was granted a construction permission for Salvador’s SkyRail project.

BYD’s ability to win the bid was driven by its expertise in providing an integrated solution, including the vehicles, tracks, stations and automatic control of communication signal systems; and ability to provide tailor-made solutions based on different terrains and localities. It was also underscored by BYD possessing its own intellectual property for these solutions, allowing the company to provide an effective and specialized rail transit system.

With Brazil as a starting point, BYD looks to further service South America and make a strong impact on the construction of urban rail transit worldwide. BYD’s Latin American market is rapidly expanding, and other BYD solutions such as its pure electric buses, taxis and trucks are successfully servicing markets in many countries across the region, including Chile, Brazil, Colombia, Argentina, Peru and Uruguay. Globally, BYD’s electric vehicles have spread to over 300 cities in more than 50 countries and regions.

BYD’s headquarters for its North and South American operations is in downtown Los Angeles, California, where the firm’s American SkyRail™ Team is based.

“Over my 45-year career in the planning, design, and construction of rapid transit systems here and abroad, I have never seen a company that matches the depth and breadth of advanced transit technology of BYD – and certainly none with the financial and R&D resources needed to maintain its leadership position over decades to come,” BYD’s Senior Strategic Advisor for SkyRail projects in North America, Dr. Thomas Stone, said. “This SkyRail™ system in Sao Paulo includes vehicles and systems similar to what the company is proposing here in Los Angeles and for several other cities in the United States. I believe this helps solidify BYD’s position as the new global leader in advanced, urban monorail technology.”

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

McLane Renews Multi-Year Contract with Convenience Store Retailer EG America

Berkshire Hathaway’s McLane Company, Inc., a leading supply chain services company providing grocery and foodservice solutions, has renewed their multi-year contract with EG America.

McLane has serviced EG America for the past several years, and the new multi-year contract period began on April 18, 2020. McLane’s distribution services cover all convenience store categories including tobacco, grocery, candy, snacks, and store supplies.

EG America is a national convenience store retailer with 1,700 stores in 31 states. In the span of only two years, they have become a top five retailer with the acquisition of Kroger’s c-stores, Cumberland Farms, Minit Mart, Certified Oil, and Fastrac. As a leader in the grocery convenience store marketplace, EG America will continue to utilize McLane’s scale of 24 grocery distribution centers across the U.S. to provide excellent service to all of their locations, except for Cumberland Farms and Fastrac which self-distribute.

With McLane’s abundant resources, they will help EG America roll out their marketing plans nationwide and build on the brand equity of their acquired business. EG America plans to utilize McLane’s national, regional, and local data to maximize their offerings to consumers. McLane’s Virtual Trade Show (VTS), an online trade show offering new products, deals, and promotions, will provide EG Group with savings on critical items for their stores.
“Working with McLane has helped us add value to our business with their quick access to data analysis, as well as their impressive scale,” says George Fournier, president at EG America. “We look forward to our continued partnership.”

Vito Maurici, senior vice president of sales at McLane, agrees. “EG America is a valued McLane customer. During our relationship, they have shown great partnership in helping grow sales and profitability for both entities. We look forward to working with them for the next several years and beyond.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Tiffany Curry Becomes First 100-Percent African American Berkshire Hathaway HomeServices Franchise Owner

Real estate leader Tiffany Curry has acquired a Berkshire Hathaway HomeServices franchise in Houston, Texas, making her the first 100-percent African American owner of a Berkshire Hathaway HomeServices worldwide.

The new company will operate as BHHS Tiffany Curry & Co., REALTORS®.

Curry’s new startup company has launched in Houston’s Upper Kirby area with agents that specialize throughout the Greater Houston and surrounding areas, including in the luxury and global markets. The firm pairs a franchise with a boutique appeal where agents and clients receive personal service and hands-on support. Curry looks to grow the company into one of the nation’s top 75 brokerages over the next 10 years with a location in each of Houston’s high traffic areas.

“Over the last 12 years I have traveled the nation, networking with some of real estate’s brightest talents. I’m thrilled to bring that mix of creativity and innovation to the Greater Houston real estate market,” said Curry. “I look forward to growing a diverse company for all generations, backgrounds and for professionals at different stages of life.”

Curry is excited to be an owner of a Warren Buffett-affiliated company and the first woman-owned BHHS in Houston.

A top Berkshire Hathaway HomeServices agent over the years, she has received numerous production recognitions including Berkshire Hathaway HomeServices’ President’s Circle and Chairman’s Circle awards. With a well-rounded, solid background as a certified relocation specialist for over 12 years, Curry has achieved outstanding success with many of the top relocation companies in the industry. From corporate executives, engineers, physicians, professional athletes and tech startups, she has worked with a number of Houston’s top professionals. Curry holds the Institute for Luxury Home Marketing Million Dollar GUILD designation for successfully marketing and selling million-dollar homes.

“Tiffany Curry is a talented leader who brings out the very best in those who work with her,” said Chris Stuart, Berkshire Hathaway HomeServices CEO. “Over the years her teams have been motivated, well-trained and laser-focused on clients’ varying needs. The same should be expected of Tiffany Curry & Co., REALTORS®.

Curry encourages people to think bigger and to always press forward. “I refused to be defined by walls, and so should you,” said Curry. “In the words of Babe Ruth, ‘It’s hard to beat a person who never gives up.’ I always tell aspiring entrepreneurs; you can achieve anything in life if you put your mind to it. More than 83 percent of my business has never looked like me; that has never deterred me from achieving my goals or business aspirations. I have always known that I wanted to own a real estate franchise even though the majority of owners I saw didn’t look like me. It never stopped me from seeing where I wanted to be.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BNSF Plans Layoffs

With declining coal volumes, BNSF Railway has begun layoffs and facilities closures.

Through May 2, year-to-date coal volumes are down 16.4 percent, as compared to 2019. Total carloads including intermodal are down 9.90 percent.

The Class 1 railroad announced that 344 positions were being eliminated. The positions were in the company’s mechanical facilities. Some employees will have the option of accepting positions in other locations and will receive relocation packages and the ability to exercise seniority as per bargaining agreements.

Two BNSF facilities in Wyoming will close permanently this summer with Donkey Creek set to close on June 5 and Guernsey closing July 7.

The company is also closing facilities in Kansas, Montana, Nebraska, and North Dakota.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock.

Commentary: Buffett Affirms Berkshire’s 3 Pillars Stand Strong

Berkshire Hathaway is so diversified that it’s impossible for it not to be impacted adversely by COVID-19. Automobile retailing through its Berkshire Hathaway Automotive network of dealerships, furniture retailing (Nebraska Furniture Mart, Jordan’s, Star Furniture, RC Willey Home Furnishings), and the See’s Candies retail stores, are just a few of its companies that are facing slumping revenues.

At the Berkshire Hathaway annual meeting held on May 2, Warren Buffett noted that the swift temporary closure of See’s retail stores in late-March left it with a huge inventory of Easter candy that will go unsold.

“…we were in the midst of our Easter season and Easter is a big sales period for See’s. And I don’t know whether we were halfway through, but we weren’t halfway through in terms of the volume is going to be delivered because it comes toward the end. And essentially we were shut down and we remain shut down. The malls that we’ve got 220 or so retail stores and we’ve got a lot of, Furniture Mart sells our candy. But the Furniture Mart’s closed down. And so See’s business stopped and it’s a very seasonal business to start with. So we have a lot of seasonal workers too that come in, particularly for the Christmas season. But we have a lot Easter candy, and Easter candy is kind of specialized too. So we won’t sell it. And we produced a good bit of it.”

Getting Nervous? Don’t Be

However, amidst the bad news was a key point that Buffett emphasized. The three main pillars of Berkshire Hathaway—its insurance, freight railroad, and energy business, are all strong and will continue to generate cash.

“Our three major businesses of insurance and the BNSF railroad, railroad and our energy business, those are our three largest by some margin. They’re in a reasonably decent position,” Buffett explained. “They will spend more than their depreciation. So some of the earnings will go, along with depreciation, will go toward increasing fixed assets. But basically these businesses will produce cash even though their earnings decline somewhat.”

Berkshire’s businesses are so strong because planning for the worst case scenario is at the heart of Buffett’s philosophy. Buffett explained that they even plan for more than one disaster.

“I mean, for example, in our insurance business, we could have the world’s, or the country’s, number one hurricane that it’s ever had, but that doesn’t preclude the fact that could have the biggest earthquake a month later. So we don’t prepare ourselves for a single problem. We prepare ourselves for problems that sometimes create their own momentum. I mean 2008 and 9, you didn’t see all the problems the first day, when what really kicked it off was when the Freddie and Fannie, the GSEs went into conservatorship in early September. And then when money market funds broke the buck… There are things to trip other things, and we take a very much a worst case scenario into mind that probably is a considerably worse case than most people do.”

And if that’s not enough to reassure you, don’t forget that Berkshire has $137 billion in cash.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway HomeServices Adds Québec Franchise

Berkshire Hathaway’s real estate brokerage franchise network, Berkshire Hathaway HomeServices, has added the independently owned and operated Les Entreprises Sacha Brosseau Inc. to the network.

The franchise will operate as Berkshire Hathaway HomeServices Québec.

This new firm is led by Sacha Brosseau, the former Chief Brokerage Officer for Sotheby’s International Realty Canada. Sacha was inspired to go into real estate by his father. He started in the real estate industry in 2005 working in partnership with his mother, a 30 plus year real estate veteran. Fourteen years later, as he imagined what step to take next and hearing how highly his colleagues spoke of Berkshire Hathaway HomeServices, his father again provided inspiration. His father who has an “affinity for investment” had been closely following Berkshire Hathaway, Inc. and hearing great things about Berkshire Hathaway HomeServices.

Brosseau reached out to Berkshire Hathaway HomeServices to see if the network would be a fit for his vision and met soon after with Michael Jalbert, Executive Vice President of Global Business Development for Berkshire Hathaway HomeServices. As they toured the city of Montreal and discussed plans and goals, they found themselves aligned in vision and core values. Brosseau described the application process as thorough, “we each conducted our own due diligence.”

Berkshire Hathaway HomeServices saw the value that Brosseau had already created in the province of Québec, while Brosseau knew his aspirations would be strongly complemented by such a trusted brand. As a result of their meeting of the minds, Brosseau is set to launch Berkshire Hathaway HomeServices Québec on June 1st 2020 — an office in Montreal with a vision for the network across the province.

In addition to the new physical presence, Sacha is building a team from his vision. “I want to be the firm that brokers aspire to join,” said Brosseau, “I won’t bring on brokers who are starting their careers, and I also won’t hire brokers who don’t play well with others. I am assembling a team of well-respected realtors who know the value of collaboration and will provide the highest level of professionalism and ethical standards to all of their clients”.

Brosseau’s vision benefits from the strength of the Berkshire Hathaway HomeServices network. He recognizes that the best people want to work for the best network.

“You can always have a great brand,” Brosseau added. “You can always have a great broker. But success in residential real estate is when you’re able to combine the two. The greatest brand cannot flourish to what its possibilities are without the best brokers being part of it. At the same time, the greatest brokers can’t flourish unless they are part of a great brand which gives them the tools they need to reach the next level in their careers.”

The brand strength goes beyond the bottom line for Brosseau. Throughout his negotiations with the network, he could see that they cared about his philosophy and success. “I do not feel like I’m part of a large corporate structure that is concerned solely with the numbers. Whatever is good for them, they want to make sure it is good for me as well.”

The addition of the Montreal location furthers Berkshire Hathaway HomeServices’ global reach, who over the past three years has added franchisees in London (Kay & Co.); Dubai (Gulf Properties); Madrid and Barcelona (LARVIA); Lisbon (Portugal Property); Milan (MAGGI Properties); and Berlin and Frankfurt (Rubina Real Estate). Berkshire Hathaway HomeServices Québec joins Toronto Living Realty to become the second network member in Canada.

When asked about Québec’s real estate future, Brosseau gave a positive but realistic assessment, “I feel very strongly about Québec. The Province of Québec has always been stable. The reality is that we always maintain a good stability. In this province, real estate is the best investment you can make for your future.”

“We are excited to work with Sacha Brosseau to bring his vision of a brokerage to the province of Québec,” said Chris Stuart, CEO of Berkshire Hathaway HomeServices. “Sacha’s singular vision along with the reputation of Berkshire Hathaway HomeServices creates a major player in the real estate market in Québec. We cannot wait to see where Sacha takes his brokerage.”

The company also gains access to Berkshire Hathaway HomeServices’ ‘FOREVER Cloud’ technology suite powered by Salesforce including lead generation, marketing support, social media content, video production/distribution support and more. In addition, Berkshire Hathaway HomeServices provides global listing syndication, professional training and the exclusive Luxury Collection marketing program for premier listings.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Gen Re Names Ulrich Pasdika to Executive Board

Berkshire Hathaway’s Gen Re has announced that Ulrich Pasdika has been appointed to the Executive Board of General Reinsurance AG, effective 1 August 2020.

General Reinsurance AG is Gen Re’s German legal entity and the main risk carrier for its international business.

The appointment comes as part of Gen Re’s succession plan for its long-standing Head of International Life/Health business, Winfried Heinen, whose forthcoming retirement was announced earlier this year. Mr. Heinen will continue to serve in his roles until 31 July 2020.

Ulrich (Uli) Pasdika is an experienced re/insurance executive who has been with Gen Re for close to 20 years. He will continue to be responsible for the recently created Life/Health business segment Europe, Latin America and MENA. Prior to this role, he led Gen Re’s Life/Health business in Germany and headed-up the international Research & Development team – a core unit that combines underwriting and actuarial resources and underpins Gen Re’s successful risk management and product development services.

Mr. Heinen stated “I am very pleased about this move. Uli and I have worked closely together for almost two decades. During this time, he has played an instrumental role in building our franchise in the German market. In addition, in recent years he has spearheaded our digitisation and insurtech activities. He embodies both Gen Re’s traditional strengths and values and our focus on the future.”

Charlie Shamieh, Gen Re’s Chairman, said “I’m delighted about Uli’s appointment. His vast experience and strong expertise in the international protection markets, in combination with his unwavering client focus, make him the ideal candidate for this position.”

© 2020 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD Reports Decline in Revenues for Q1

Battery and carmaker BYD has announced that its net profit for the first quarter fell roughly 85 percent from the same period last year.

Total revenues in the first quarter slumped 35 percent to 19.68 billion yuan.

BYD’s total vehicle sales for the first three months plunged 48 percent from the same period in 2019 to 61,273 units. Of those sales, New Energy Vehicles accounted for 22,192 vehicles with electric and plug-in hybrid drive, which in addition to reduced sales due to the impact of COV-19, were also hurt by a decrease in government subsidies that went into place mid-2019.

With China reopening rapidly from the COVID-19 shutdown, BYD projected that revenues would rebound and predicted profits will increase 10 to 23 percent for the first half of the year.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2020 David Mazor

Berkshire Hathaway Specialty Insurance Expands Local Property Team in France

Berkshire Hathaway Specialty Insurance has expanded its property team in France with the addition of Jean-François Leandri as Risk Control Consultant.

“Jean François’s extensive risk control consulting expertise significantly enhances our property underwriting and service for customers across France and Belux ” said François-Xavier d’Huart. “We are pleased to welcome him to our team, while we continue to expand both our local underwriting and services in the region.”

Trained as both a boiler & machinery and fire prevention consultant, Jean-François has nearly 25 years of engineering experience. He spent the last 17 years as District Manager at Global Risk Consultants, where he led a Paris-based technical team responsible for risk consulting on a range of occupancies across portions of Europe and Africa. He began his carrier as Field Engineer at UAP Kemper HPR Company.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway First Quarter Earnings

Berkshire’s operating results for the first quarters of 2020 and 2019 are summarized in the following paragraphs. However, we urge investors and reporters to read our 10-Q, which has been posted at www.berkshirehathaway.comThe limited information that follows in this press release is not adequate for making an informed investment judgment.

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the first quarters of 2020 and 2019 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

First Quarter

2020

2019

Net earnings (loss) attributable to Berkshire shareholders

$

(49,746

)

$

21,661

Net earnings (loss) includes:

Investment and derivative gains (losses) –

Investments

(54,517

)

15,498

Derivatives

(1,100

)

608

(55,617

)

16,106

Operating earnings

5,871

5,555

Net earnings (loss) attributable to Berkshire shareholders

$

(49,746

)

$

21,661

Net earnings (loss) per average equivalent Class A Share

$

(30,653

)

$

13,209

Net earnings (loss) per average equivalent Class B Share

$

(20.44

)

$

8.81

Average equivalent Class A shares outstanding

1,622,889

1,639,821

Average equivalent Class B shares outstanding

2,434,333,367

2,459,731,886

Due to a change in Generally Accepted Accounting Principles (“GAAP”) in 2018, we are required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our earnings statements. In the table above, investment gains/losses include a loss of approximately $55.5 billion in the first quarter of 2020 and a gain of approximately $15.1 billion in the first quarter of 2019 due to changes during the first quarters of 2020 and 2019 in the amount of unrealized gains that existed in our equity security investment holdings. Investment gains (losses) also include after-tax realized gains on sales of investments of approximately $965 million and $392 million in the first quarters of 2020 and 2019, respectively.

The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.

An analysis of Berkshire’s operating earnings follows (dollar amounts are in millions).

First Quarter

2020

2019

Insurance-underwriting

$

363

$

389

Insurance-investment income

1,386

1,237

Railroad, utilities and energy

1,751

1,858

Other businesses

2,038

2,200

Other

333

(129

)

Operating earnings

$

5,871

$

5,555

At March 31, 2020, insurance float (the net liabilities we assume under insurance contracts) was approximately $130 billion, an increase of approximately $1 billion since yearend 2019.

Use of Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance with Regulation G are included herein.

Berkshire presents its results in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public and others who use Berkshire’s financial information. That presentation includes the use of certain non-GAAP financial measures. In addition to the GAAP presentations of net earnings, Berkshire shows operating earnings defined as net earnings exclusive of investment and derivative gains/losses.

Although the investment of insurance and reinsurance premiums to generate investment income and investment gains or losses is an integral part of Berkshire’s operations, the generation of investment gains or losses is independent of the insurance underwriting process. Moreover, as previously described, under applicable GAAP accounting requirements, we are now required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our periodic earnings statements. In sum, investment gains/losses for any particular period are not indicative of quarterly business performance.

About Berkshire

Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

Cautionary Statement

Certain statements contained in this press release are “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guaranties of future performance and actual results may differ materially from those forecasted.