from the March 2012 issue

Buffett: Iscar continues to amaze us

"Iscar's managers - Eitan Wertheimer, Jacob Harpaz and Danny Goldman - are brilliant strategists and operators." 26 February 12 11:42, Globes' correspondent inShare0

Warren Buffett heaped praise on Iscar Ltd. (IMC Metalworking Companies), calling it one of "the fabulous five" in his annual letter to Berkshire Hathaway Inc. (NYSE: BRK.A; BRK.B) shareholders, published as part of the company's financial report for 2011. "Iscar, our 80%-owned cutting-tools operation, continues to amaze us," he says.

Buffett adds, "Its sales growth and overall performance are unique in its industry. Iscar's managers - Eitan Wertheimer, Jacob Harpaz and Danny Goldman - are brilliant strategists and operators. When the economic world was cratering in November 2008, they stepped up to buy Tungaloy, a leading Japanese cutting-tool manufacturer. Tungaloy suffered significant damage when the tsunami hit north of Tokyo last spring. But you wouldn't know that now: Tungaloy went on to set a sales record in 2011. I visited the Iwaki plant in November and was inspired by the dedication and enthusiasm of Tungaloy's management, as well as its staff. They are a wonderful group and deserve your admiration and thanks."

Iscar is one of Berkshire's five largest non-insurance companies, alongside railroad Burlington Northern Santa Fe Corporation, Lubrizol Corporation, Marmon Group, and MidAmerican Energy Holdings Inc., which delivered record operating earnings. Their aggregate revenue was $9 billion pretax revenue in 2011. "Unless the economy weakens in 2012, each of our fabulous five should again set a record, with aggregate earnings comfortably topping $10 billion."

In the review of Berkshire's manufacturing operations, of which Iscar is a part, Buffett said that Iscar saw strong demand for its products. The company helped drive the 11% increase in the manufacturing activities' $17.7 billion revenue in 2010, along with Forest River, CTB and Johns Manville,

Iscar had 11,067 employees at the end of 2011.

Berkshire paid $4 billion for 80% of Iscar from the Wertheimer family in 2006. It acquired MidAmerican in 2000, Marmon in 2008, Burlington Northern Santa Fe in 2010, and Lubrizol for $98 billion in 2011.

Reprinted from the Israel High-Tech & Investment Report March 2012

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