Berkshire Hathaway recently released its annual report, which contained information on the company’s Forest River subsidiary.
According to the report, consumer products revenues were approximately $12.5 billion in 2018, an increase of $394 million (3.2 percent) compared to 2017, which was primarily due to revenue increases of Forest River and of Berkshire Hathaway’s apparel and footwear businesses.
Forest River’s revenues increased 2.6 percent in 2018, reflecting relatively unchanged unit sales versus 2017. However, over the second half of the year, comparative sales declined 5 percent, reflecting a 7 percent decline in units sold.
Management attributes the slowing of sales, in part, to the effects of U.S. tariffs on steel products.
In addition, pre-tax earnings were $1.2 billion in 2018, an increase of $96 million (8.6 percent) compared to 2017. Pre-tax earnings as a percentage of revenues were 9.6 percent in 2018 and 9.2 percent in 2017. The increase in earnings reflected increases from Duracell and the apparel and footwear businesses, partly offset by lower earnings from Forest River and Larson Juhl.
Forest River’s pre-tax earnings in 2018 declined 9 percent compared to 2017. Operating results were adversely affected over the second half of 2018, and in the fourth quarter in particular, by higher material costs, which, together with the effects of lower sales volumes, contributed to a 28 percent reduction in fourth quarter pre-tax earnings.
As a comparison, Forest River’s revenues increased 13.7 percent in 2017 compared to 2016, reflecting a 13.5 percent comparative increase in units sold. Forest River’s earnings increased 23 percent in 2017, primarily attributable to the increase in sales and lower manufacturing overhead rates.
