(BRK.A), (BRK.B)
Berkshire Hathaway’s Precision Castparts (PCC) has reported robust revenue growth in the first quarter of 2023, buoyed by a recovery in its aerospace business.
PCC’s revenues were $2.25 billion, representing a notable 28.1% surge from the previous year. The company is a leading player in the aerospace industry, and its earnings are heavily dependent on sales of aerospace products. The increase in revenue was primarily driven by a rise in demand for aerospace products, although the power/energy and general and industrial products also contributed to the overall revenue growth.
The long-term industry forecasts suggest that there will be strong demand for air travel and aerospace products, which bodes well for PCC’s future prospects. The company’s pre-tax earnings increased by 23.0% in the first quarter of 2023, reflecting an improvement in manufacturing and operating efficiencies.
PCC is a part of Berkshire’s industrial products group, which comprises The Lubrizol Corporation, metal cutting tools/systems IMC International Metalworking Companies, and Marmon Holdings. Marmon is an umbrella group that comprises over 100 autonomous manufacturing and service businesses. It includes leasing for the rail, intermodal tank container, and mobile crane industries, equipment and systems for the livestock and agricultural industries (CTB International), and a variety of industrial products for diverse markets (Scott Fetzer and LiquidPower Specialty Products).
Starting from October 19, 2022, Marmon also includes businesses acquired in connection with Alleghany, such as the structural steel fabrication products business conducted through W&W|AFCO Steel, as well as other businesses that became part of Marmon.
The combined revenues of Berkshire Hathaway’s industrial products group increased by $1.4 billion (18.6%) in the first quarter of 2023 compared to 2022, and pre-tax earnings grew by $225 million (18.5%). The pre-tax earnings as a percentage of revenues for the group were 16.3% for both the first quarters of 2023 and 2022. The operating results of the group in the first quarter of 2023 were impacted by business acquisitions and overall improved operating results at the pre-existing businesses.
Berkshire Hathaway’s overall operating earnings for Q1 2023 were a remarkable $8.065 billion, representing a significant increase from the first quarter of 2022, which recorded earnings of $7.160 billion. The conglomerate’s performance has been commendable, considering the challenges posed by the pandemic and the changing economic landscape.
© 2023 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, 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.