巴菲特致股东的信1971.pdfVIP

巴菲特致股东的信1971 TotheStockholdersofBerkshireHathawayInc.: It is a pleasure to report that operating earnings in 1971, excluding capital gains, amounted to more than 14% of beginning shareholders equity. This result--considerably above the average of American industry--was achieved in the face of inadequate earnings in our textile operation, making clear the benefits of redeployment of capital inaugurated five years ago. It will continue to be the objective of management to improve return on total capitalization (long term debt plus equity), as well as the return on equity capital. However, it should be realized that merely maintaining the present relatively high rate of return may well prove more difficult than was improvementfromtheverylow levelsofreturnwhichprevailedthroughoutmostofthe1960s. TextileOperations We, in common with most of the textile industry, continued to struggle throughout 1971 with inadequate gross margins. Strong efforts to hammer down costs and a continuous search for less price-sensitivefabricsproducedonlymarginalprofits. However,withouttheseeffortswewouldhaveoperatedsubstantiallyinthered. Employment was more stable throughout the year as our program to improve control of inventoriesachievedreasonablesuccess. As mentioned last year, Ken Chace and his management group have been swimming against a strong industry tide. This negative environment has only caused them to intensify their efforts. Currently we are witnessing a mild industry pickup which we intend to maximize with our greatly strengthened sales force. With the improvement now seen in volume and mix of business, we would expect better profitability--although not of a dramatic nature--from our textile operation in 1972. InsuranceOperations An unusual combination of factors--reduced auto accident frequency, sharply higher effective rates in large volume lines, and the absence of major catastrophes--produced an extraordinarily good year for the property and casualty