Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., told employees of the firm’s hog-products unit he expects the operation to expand for decades.
“CTB has been moving ahead every year since we bought it,” Buffett said in a video posted on the Web site of CTB Inc., Omaha, Nebraska-based Berkshire’s agriculture-equipment unit. “We’ll hit a bump in the road every now and then but we’re looking at a superhighway out there in front of us.”
Buffett became the second-richest American by investing in businesses he expects to grow for decades. He’s said his $26 billion takeover of railroad Burlington Northern Santa Fe Corp., announced in November, will benefit Berkshire “over the next century.” CTB, which Berkshire bought in 2002, may produce profits beyond the year 2200, Buffett, 79, said in the video.
“Most years are going to be good, a few years will be standouts, and there will be a few that are bummers,” Buffett said. “But that’s the way we look at everything here at Berkshire Hathaway. We’re going to be in these businesses for 100 years or 200 years.”
CTB, which sells feeders and stalls under the PigTek and Chore-Time Hog brands, has expanded abroad by buying businesses in Israel, Germany and the Netherlands. Chief Executive Officer Victor Mancinelli persuaded Buffett to buy his firm. Howard Buffett, a farmer and the billionaire’s son, endorsed the deal.
Good Things
“I checked with Howie; he told me CTB was an absolute first-class company and he’d heard good things about Vic,” Buffett said. “Howie would rather spend an evening on a tractor in the field than a date with Angelina Jolie, which is not true of all members of the family, but that’s true of Howie.”
Howard Buffett has been picked to succeed his father as Berkshire’s chairman when Warren Buffett’s tenure, entering its fifth decade, comes to a close. The elder Buffett, who owns about a quarter of Berkshire and is its CEO, has said settling on his eventual replacement as chief is the No. 1 responsibility of the firm’s board.
In the CTB video, Buffett praised Mancinelli. “Vic is a manager that could run any company in the Fortune 500,” Buffett said. “He’s done a wonderful job for us.”
U.S. hog farmers have shrunk the size of sow herds to the smallest since at least 1976, as feed prices jumped to a record in 2008 and the recession and an outbreak of swine flu sapped pork demand in 2009.
‘Year After Year’
“There will be low prices and there will be high prices,” Buffett said. “But the one thing you can be sure about is that our industry is going to be there year after year after year.”
Berkshire’s acquisition of CTB was valued at $177 million, according to Bloomberg data. Six years later, in 2008, the unit produced pretax earnings of $89 million, Buffett said in the company’s 2009 annual letter. CTB bought six companies in the interim, including Swine Services Specialists Inc. and Porcon group of Deurne, the Netherlands.
“The CTB story is just starting,” Buffett said. “I am 79 so I’ll be 100 in 2030. Stay tuned for a rebroadcast at that time and I’ll be telling you about all kinds of wonderful things that have happened in the company. It’s in the right industry. Farming is as fundamental as things get in this country.”
source: bloomberg, warren buffett