WWD : LVMH Has No Plans to Take On Resale Market, Says Antoine Arnault

LVMH Has No Plans to Take On Resale Market, Says Antoine Arnault
LVMH's Antoine Arnault spoke to Miles Socha on topics including fashion shows, sustainability rankings and cooperating with competitors.

PARIS — LVMH Moët Hennessy Louis Vuitton does not plan on getting involved in the secondhand market, according to Antoine Arnault, head of image and environment for the French luxury group, who spoke to WWD international editor Miles Socha at Fairchild Media Group’s Sustainability Summit on a range of topics, including live fashion shows, sustainability rankings and cooperating with competitors.

“It’s definitely a business that’s been thriving, as we see and read, but as I was just mentioning, we have such long-lasting products and we repair them, we for the moment will stick to that and proposing as beautiful new products, as creative and thrilling new collections as we can,” he said.

“For the moment we will stay away from that secondhand market,” added Arnault.

The secondhand market has been heating up lately and Kering earlier this month revealed an investment in luxury resale platform Vestiaire Collective, a company that has embraced data and digital means for global expansion.

Arnault instead emphasized his company’s focus on repairing products, and characterized his group’s focus on fashion that lasts as opposed to fast-fashion.

“Our products are very long-lasting,” he asserted, suggesting that the company produces things “in very small quantities” and offers products that one should “never throw away.”

“I don’t think we have anything to do with this fast-cycle industry, we have long-lasting very ‘durable products,’” he said, drawing on an argument often employed in the high-end industry in response to questions about the environmental impact of activities.

LVMH is expanding repair services as a way to improve the lifespan of products, noted Arnault, who is also chief executive officer of Berluti, a brand that reshines shoes with a fresh patina after use.

When it comes to the issue of fashion shows, the executive said that the group had convened experts in the sector, including Marine Serre and Alexandre de Betak, to discuss issues around the future of luxury, including the necessity of fashion shows.

“As always, with these topics that seem simple, they are not,” he said. While bringing people across the planet for a cruise show was probably “a bit too much,” fashion weeks mean brisk business for hotels and restaurants, noted the executive.

“But even probably more importantly so, countless designers, young designers who have their only opportunity of the year or of the season to show what they do to buyers, to press, to opinion makers, to celebrities that will maybe pick on that one look that they have and suddenly become a success,” he said.

Still, the pandemic has brought lasting change to the sector’s approach, noted Arnault.

“We probably have reached the end of a cycle at the beginning of this pandemic and the end of a system in a way,” he remarked.

“We recognize that there was some sort of frenzy in the past few years and maybe we ourselves in a way have been swept into a whirlwind to always want to offer something extravagant and novel,” said Arnault.

Before, physical events came first, while their translation into the digital realm were thought up after, he noted.

“Now it’s the other way around — it completely shifted that paradigm.”

“However I do think that physical shows will absolutely continue,” he continued, suggesting that a lack of physical shows would benefit the biggest fashion houses.

“But that’s not the way we see it — we need also young designers to thrive and through fashion weeks do they thrive,” he said.

“Keeping these fashion shows alive, I think, is also a priority,” said Arnault.

Asked about the role of Stella McCartney since she joined the group in 2019, the executive described her as “our internal activist.”

“But she’s very open-minded and she doesn’t impose her views on everyone else, she works very intelligently with the rest of the designers and the rest of the teams, she is not selfish about her findings or her technology — she gives them away, it’s a sort of open source with her,” he said, citing her focus to upcycling and supply chains as an influence. Louis Vuitton offered upcycled sneakers this spring and Fendi is monitoring suppliers.

When it comes to policies on fur and exotic leathers, the group leaves it up to individual brands to make their own decisions, he said.

“When you address the issue seriously and when you talk to experts, it’s the sad truth that through commerce of these animal skins or animal furs, you manage to help to preserve the species,” he noted.

“It’s a sad fact, I’m not saying it’s something great, but it’s the scientific and the absolute truth,” he said.

“So we took the decision as a group — and I’m not saying it’s courageous and I’m not saying it’s any kind of bravery — but we took the decision to continue to help these economies, to help these people who often live only through the commerce of these animals and skin and to continue to propose them to our clients,” said Arnault.

Reflecting on the group’s efforts related to biodiversity, through Unesco’s ‘Man and the Biosphere’ program, the executive noted the group relies on materials from nature.

“Biodiversity and protection of nature’s ecosystems has always been at the heart of what we do,” he said. “We are are very reliant on nature and raw materials, probably more than any other group — I mean flowers with perfumes, vines for our wines and spirits, cotton, leather, stones, you name it, we depend — our future depends on the fact that nature continues to offer us its wonders,” he said.

When it comes to sustainability rankings, he said the group is not “obsessed” about them.

“There are more and more of these rankings, and while we take the matter very seriously as you can imagine and hold ourselves accountable for progress — the methodology of these rankings is sometimes not very transparent, and we strive to do our best efforts of transparency and publish the most relevant information,” he said.

“We feel very confident that we are taking the right track. I think in the long run we’re taking the right decision not to be obsessed by this or that ranking,” added Arnault.

Asked about cooperating with others in the industry — LVMH raised eyebrows for not signing up to the Fashion Pact, set up by Kering last year — the executive said there was “healthy emulation” in the sector on sustainability issues even as there is competition in other areas.

“On very important topics we see groups that unite sometimes and if it leads to good decisions, you saw we partnered up with the rest of the industry for the model charter for instance,” he said.

“We tend to cooperate more than people think with our competitors for the simple reason that we often have the same suppliers and we speak more often than people think with them, so trying to enhance best practices, create new standards, I think it’s important that we keep a good relationship.”

(ZH) Massive Chinese Rocket Will Make Uncontrolled Reentry Within Days

Massive Chinese Rocket Will Make Uncontrolled Reentry Within Days

China successfully launched a key module of a new space station Thursday using the latest version of the Long March 5B heavy-lift booster. After completing its mission, the core stage of the rocket is still in orbit and could make an uncontrolled re-entry in the near term, according to SpaceNews.
The Long March 5B uses a core stage and four side boosters to launch heavy payloads into low Earth orbit. The rocket carries the payload up to orbit instead of separating at a lower altitude. This means that the Long March 5B booster is now uncontrollably tumbling back to Earth.
US military radars have detected the object and classified the rocket body as "2021-035B." It's a massive rocket body measuring more than 30 meters long and 5 meters wide, weighing 21 metric tons. The speed of the object is traveling at more than seven kilometers per second.
Jonathan McDowell, an astrophysicist at the Harvard–Smithsonian Center for Astrophysics, suggested the rocket is not under control as it makes its way back to Earth.
This is the second launch for the Long March 5B, and the first occurred on May 5, 2020. Back then, the booster orbited for six days then shortly after made an uncontrolled re-entry.
"Where and when the new Long March 5B stage will land is impossible to predict. The decay of its orbit will increase as atmospheric drag brings it down into more denser," said SpaceNews.
So, for now, look out above as an uncontrolled re-entry of a massive rocket plummets back to Earth could occur in the coming days.

WSJ : Frieze New York Tests Whether Collectors Will Return to Art Fairs

Frieze New York Tests Whether Collectors Will Return to Art Fairs
The contemporary art fair opens May 5, with a new location, new safety protocols—and some highly charged new works.

This week, collectors are expected to head to Frieze New York, the first major U.S. art fair since the pandemic and a likely litmus test of their willingness to attend such events in
person.

In past years, 50,000 people usually turned out for the contemporary art fair known for showing edgy artists. Last year it was canceled and when the fair opens Wednesday, the experience will be different.

Instead of being held in a tent on Manhattan’s Randall’s Island, Frieze will take place in a multipurpose cultural venue called the Shed, near the Hudson Yards commercial and residential development on the West Side. Visitors will have to wear masks, use timed tickets and show proof of vaccination or a recent negative Covid-19 test result. Roughly 730 visitors may wander the fair at any given time, organizers said, to keep total occupancy around 850, including Frieze and gallery staff.

Frieze moved to the Shed in part so organizers could space the 60 gallery booths over three floors—in contrast with the warren of around 160 booths at Frieze New York in the past. International travel restrictions and concerns led 100 galleries to show in the fair’s concurrent online viewing rooms.

Fair director Rebecca Ann Siegel said some VIPs might be surprised to learn they can’t just drop by during the opening hours. Her team has reassured top collectors and art advisers that major pieces will be available throughout the fair, which runs through May 9. People also look to Frieze to discover art trends and breakout stars. Here are highlights, whether attending in person or online.

“Some collectors may think 11 a.m. opening day is the only time to be there, but we hope they see that we can only do this with a fair amount of understanding,” Ms. Siegel said. “People want a safe way forward.”

Art as Protest
Nearly every gallery is showing pieces that illustrate how artists wrestled with events of the past year—so expect plenty of works that pack a political punch. “For many artists, the past year was as characterized by the Black Lives Matter movement as much as the pandemic,” Ms. Siegel said.

The fair commissioned several pieces to honor Harvard University professor Sarah Lewis’s Vision & Justice Project, an effort launched in 2016 to explore how Black people have sought to documented their lives visually, often despite systemic injustices. Artist Carrie Mae Weems, known for her searing look at race and class, will display a billboard-size photograph of books on the Shed’s fourth floor, where it can be seen by people outside walking the Highline elevated path. Artists Hank Willis Thomas and Mel Chin are hanging huge vinyl signs with sayings like “Who Taught You to Love?”

Precious Okoyomon recorded a Towel of Babel-like performance in which several poets read her poem “Skysong”—sometimes speaking over one another in a discordant jumble—while standing on camouflaged scaffolding on the Shed’s top floor. A video of the performance, titled “This God is a Slow Recovery,” will play throughout the fair.

Among the galleries, Gordon Robichaux will display Otis Houston Jr.’s spray-painted signs, which at one point hung along the city’s FDR Drive. The gallery will also offer the Harlem artist’s poignant assemblages like “Mother Sadie,” a furry chair whose legs stand on brightly colored heels amid other accessories that evoke a cryptic portrait or shrine.James Cohan’s booth will feature a showdown: Trenton Doyle Hancock’s potent paintings of his Black superhero, Torpedoboy, confronting the hooded figures often seen in Philip Guston’s paintings.

Art as Wall Power
After a year where art was seen mostly on screens—or as NFTs—expect galleries to emphasize the heft of standing before a canvas. David Zwirner will show a new series of 7-foot-tall, jewel-tone paintings by Whitney Biennial alumna Dana Schutz. Eva Presenhuber and Sprüth Magers have teamed up to show a 35-year survey of Philadelphia icon Karen Kilimnik’s surreal landscapes and castle scenes. Gagosian is showing Polish painter Ewa Juszkiewicz’sfantastical portraits of Rococo women, some with faces wrapped in ribbons or leafy plants that evoke masks. Those lush paintings are being shown alongside Rachel Feinstein’s sculptures that evoke the meringue-looking pedestals of Baroque figurines.Other highlights include dealer Michael Werner’s display on Sigmar Polke and White Cube’s 2019 view of a skeletal golden hand by Georg Baselitz, “Manopola-Fausthandschuh.”I

Loring Randolph, the fair’s programming director, said many galleries are coordinating their online works with ones they are showing at the Shed, and a dozen online talks are planned with major artists like Richard Prince and Theaster Gates. “Everyone is thinking about how to layer art with history now,” she said, referring to the complexities explored in this edition of the fair. “We’re layering, too.”

FT : Mental health/psychedelic drugs: mushrooming investor interest fuels resear

Mental health/psychedelic drugs: mushrooming investor interest fuels research
Effective new treatments will find a large market

Investors are tuning into psychedelic stocks. A succession of market newcomers is raising funds to explore the use of mind-altering drugs for mental disorders. It is a controversial area of research. But given the need for better treatments, the nascent market could grow rapidly.

Atai Life Sciences, a Berlin-based company backed by tech investor Peter Thiel, announced plans in late April to raise $100m in an initial public offering. New York-based MindMed, which already trades on the Canadian and German exchanges, moved on to Nasdaq last week. They will join London-based Compass Pathways, also backed by Thiel, which joined Nasdaq last September.

The quoted psychedelic companies, which also include Canadian companies Cybin, Field Trip Health and Numinus Wellness, together have a market value of more than $3.5bn. Compass and MindMed are the biggest pure-plays, though drug giant Johnson & Johnson also figures. Its ketamine-derived depression treatment Spravato was designated a breakthrough therapy by US regulators in 2019.


Compass’s formulation of synthetic psilocybin, the psychedelic ingredient found in magic mushrooms, also secured that designation. A small trial by British scientists found in April it was at least as effective as a leading antidepressant drug. Peak sales could be more than $2.5bn, says Berenberg. After adjusting for the probability of success and discounting the potential cash flow, it reckons the shares, now trading at $36, could be worth 40 per cent as much again. 

The global market for psychedelic drug treatments will nearly triple to $7.6bn in the eight years to 2028, predicts Data Bridge Market Research. But there could be obstacles ahead. The last era when psychedelic drugs were used to treat depression ended with new legal restrictions in the early 1970s. There could again be a backlash if patients, encouraged by the research findings, take risks with non-pharmaceutical versions of the drugs.

Last November, Washington DC and Oregon pioneered the decriminalisation of the ingredient found in magic mushrooms. The news lifted shares in MindMed and Compass by nearly a tenth. But it could blur the distinction between naturally occurring hallucinogens and the compounds synthesised and tested to high regulatory standards. 

Yet the move also suggests growing acceptance of the use of psychedelic drugs for treating mental health problems. There is a large unmet need, exacerbated by the Covid-19 crisis. New treatments, if effective, would find a large market.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Canadian cannabis producers are better-known than their American rivals, but that’s set to change with legalization on the horizon

* Cover Story: Though US cannabis companies such as Curaleaf, Green Thumb Industries, Trulieve Cannabis, and Cresco Labs have licenses to operate in some states, their businesses are hampered by marijuana’s illegality under US federal law, giving Canadian rivals listed on the Nasdaq an advantage—but events are starting to look up for American operators as Washington moves closers to making weed legal, and shares of US operators have gained amid a growth in sales, while those of most Canadian producers are down.

* Tech Trader: Positive on AAPL, AMZN, FB, GOOGL, MSFT: The tech giants performed better during the last year than most people expected, and while their shares aren’t the bargains they were a year ago, there’s a case to be made that there are no better stocks to play technology trends such as cloud computing, growth in the PC market, e-commerce, advertising, and chip shortages.

* Trader: The market still has a concentration problem—the S&P 500’s five largest stocks make up 21.6 percent of the index, down from 23.9 percent at their peak, but still far bigger than the 18.1 percent reached at the height of the dot-com bubble; Positive on SHW: The paint company stands to benefit from rising prices as inflation goes up, with the biggest question being whether inflation will be transitory or more sustained; Cautious on X, STLD, NUE: Steel prices have gained nearly 60 percent this year, helped by production cutbacks during the pandemic, but they can’t go up forever, and history suggests they are nearing a peak.

* Profile: Henrik Strabo, who runs the $721 million Manning & Napier Rainier International Discovery fund, invests in small- and mid-cap international stocks, a universe of about 5,000 companies across developed and emerging markets; Focus is a common theme among the roughly 100 holdings in the fund—these companies aren’t “involved in a million different things, which allows them to become incredibly good at what they do,” says Strabo.

* Interview: Lucas White, manager of the GMO Climate Change fund, focuses on companies that benefit from mitigating climate warming or adapting to it, and talks about how the fossil-fuel industry is adapting as the climate issue heats up; he says investors should avoid the electric vehicle market and hydrogen companies.

* Features: 1) Positive on AIMC: There are three good reasons to buy shares of the manufacturer of electromechanical power-transmission motion-control products, such as breaks, gears, and clutches—economic growth will increase demand, shifts to automation and re-shoring could provide a secular boost to sales, and the company is paying down debt from a 2018 acquisition; 2) Positive on PGR: The insurance company, a pioneer in employing real-time driving information to price auto insurance policies, consistently gains market share year after year, and “is an unusual corporate creature: a growth company in a slow-growth industry”; 3) Positive on BAC: The firm, led by unassuming chief Brian Moynihan, “may be the best-positioned of the big US banks to navigate both the current climate, in which capital markets reign supreme, and the accelerating post-pandemic economic recovery—even after a 35 percent gain this year, to a recent $41 a share, its stock still looks like a buy”; 4) Digital currencies aren’t yet widespread, but a race is on to get them into circulation as battle lines harden between cryptocurrencies and standbys like the dollar, and more than 85 percent of central banks are investigating digital versions of their currencies, conducting experiments, or moving to pilot programs, according to PwC—with China leading the pack among major economies; 5) Story reports on the dispute over “contingent value rights” that were part of BMY’s acquisition of Celgene—it agreed to pay an extra $9 per share, or about $6B, if three Celgene drugs were approved on time, but the pandemic caused delays, prompting some CVR holders to prepare litigation to force Bristol to pay up.

* Follow Up: Positive on CROX: Recent products, such as footwear made in partnership with YUM, have been consumer hits, and the company’s beat-and-raise results show it’s still going strong, and more than just a pandemic play; Positive on FB, GOOGL: Recent earnings reports confirm the two tech giants continue to thrive, largely because digital advertisers have returned to their pre-pandemic habits and are sending most of their dollars to Facebook and Google.

* European Trader: Positive on IHG: The hotel company looks as if it has limited upside, because a post-pandemic return to travel is already factored into the price, but investors shouldn’t underestimate potential gains—as the pandemic winds down, the company’s new brands are poised for growth.

* Emerging Markets: C’s announcement that it would sell its Indian banking business, part of a worldwide pullback from retail banking, has set off a scramble among a range of potential buyers—including DBS Group Holdings, ICICI Bank, and Axis Bank—a sign of the wide-open prospects for Indian finance beyond the pandemic.

* Commodities: Corn has led the rally among agricultural crops, rising more than 30 percent in 2021 to touch its highest prices in nearly eight years, outpacing the rally for wheat and soybeans, which also reached their highest prices since 2013—and the run-up for corn and soybeans may not be over.

* Streetwise: The thinking around autonomous driving continues to change, says columnist Alex Eule. “Everyone still talks about our driverless future, but fewer companies want to be a direct part of it. UBER sold its own autonomous vehicle business last December.”

FT : UK faces ‘blood on the carpet’ over £6bn rent arrears

UK faces ‘blood on the carpet’ over £6bn rent arrears
Hospitality and retail struggle with debts as eviction ban and rates holiday ends

The UK government is under pressure to resolve a £6bn rent arrears crisis and prevent a deluge of legal disputes between commercial tenants and landlords, ahead of the end of a temporary ban on evictions next month.

“If the government doesn’t do anything you will have blood on the carpet. All you need is one landlord to trigger the payment requirement in full and the whole company could fall,” said Kate Nicholls, head of UKHospitality, the trade body.

The ban has prevented evictions since it was introduced last March 2020 but ends on June 30. 

In a letter sent to housing secretary Robert Jenrick on Friday that has been seen by the Financial Times, UKHospitality argued that “there is a moral obligation on landlords . . . to make rent concessions to businesses forced to close”.

It suggests the government should extend the eviction moratorium until December to allow businesses to recover after lockdown ends, and develop an adjudication process on sharing losses between tenants and landlords with at least 50 per cent of rent debt written off.

Hospitality and retail are among the sectors worst affected by the pandemic, having been shut down for long periods. 

UKHospitality estimates that £2bn in rent is owed by hospitality businesses with 40 per cent of premises still negotiating over current unpaid rent with landlords. A further 20 to 30 per cent are still in discussions on how to settle debts from last year’s lockdowns, it said.

Ministers have asked tenants and landlords for their views on six potential ways forward, with submissions due by Tuesday. These range from simply ending the eviction ban to a binding adjudication process for landlords and tenants. 

A group of landlords, led by British Land, Land Securities and trade body the British Property Federation, put forward their own proposal on Thursday. They argue that businesses should pay rent from the end of June, by which time trading will have resumed under the government reopening plans. 

They also propose that unpaid rent built up since March 2020 would be ringfenced and tenants protected until the end of 2021, giving time for them to reach agreements about how much will be written off, deferred or paid.

If a settlement cannot be reached, the landlords propose a binding arbitration process. “Ultimately you need something to bring people to the table,” said Mark Allan, Landsec chief executive. 

Hospitality businesses argue their recovery could be crippled by having to pay rent so soon after they have been permitted to reopen fully on June 21, combined with the business rates holiday that also finishes at the end of June.

Peter Thornton, chief financial officer of Piano Works, which runs two bars in London, said they had rent arrears of £687,000 and had not reached agreement with either of their two landlords on when or how the money should be paid. “We have a huge financial risk once we get back and trading . . . we are at the mercy of the landlord,” he said.

David Abramson, chief executive of commercial property consultancy Cedar Dean, said the problem was particularly acute for smaller businesses that did not have the resources to employ advisers to negotiate with landlords. 

Several large companies including New Look and The Restaurant Group have been through administration processes that forced landlords to cut rents. But in the past fortnight, two High Court judgments ruled that tenants including Sports Direct, Mecca Bingo and Cineworld will have to pay arrears. 

FT : Russian billionaires file lawsuits over book on Putin’s rise

Russian billionaires file lawsuits over book on Putin’s rise
Mikhail Fridman is among those to have filed a suit against publisher HarperCollins

Four Russian billionaires and the country’s state-owned energy giant have filed lawsuits against HarperCollins over a book it published last year about the rise of Vladimir Putin.

The legal assault on the book, Putin’s People, has come in a flurry of cases brought in the London courts, all within a few weeks of each other, including by Mikhail Fridman, the banking, retail and telecoms tycoon, and Roman Abramovich, the owner of Chelsea football club.

The libel and data protection lawsuits name HarperCollins’ UK arm along with the book’s author, Catherine Belton, a former Financial Times journalist. Putin’s People, released in April 2020, details the Russian president’s ascent to power and his relationship with wealthy oligarchs.

The litigation highlights the high-stakes nature of writing about powerful oligarchs and the role of London-based lawyers in defending the interests of the global elite. The law firms acting for the claimants are Carter-Ruck, CMS, Harbottle & Lewis, and Taylor Wessing.

HarperCollins described Belton’s book as an “authoritative, important and conscientiously sourced work”. “We will robustly defend this acclaimed and groundbreaking book and the right to report on matters of considerable public interest,” the publisher added. Belton had no separate comment.

Abramovich, who filed the first suit, in March said that his “action was not taken lightly” and that the book had contained “false and defamatory” statements about him. Court documents showed Abramovich’s libel suit disputes a claim that Putin ordered his 2003 acquisition of Chelsea as well as other allegations. A spokesperson for Abramovich had no further comment.

The book sources the claim to exiled Russian billionaire Sergei Pugachev, who was once a member of Putin’s inner circle before falling out, fleeing the country, and becoming a dissident. In a case in 2017, a High Court judge described Pugachev as an unreliable witness.

The other claimants, whose actions have not been previously reported, are Fridman, his longtime business partner Peter Aven, Russian real estate tycoon Shalva Chigirinsky, and Rosneft, the Kremlin-controlled oil producer. Aven has brought his claim under data protection law. Court documents for those cases are not yet available.

The lawsuits came in quick succession in March and April, around the one-year deadline in UK law for libel actions.

“We can confirm that neither Mr Aven nor Mr Fridman had any prior knowledge of the other lawsuits you have referred to,” a spokesperson for Fridman said in a statement. “They have had no contact with, and did not co-ordinate a legal strategy with, the other plaintiffs or their lawyers.

“Mr Aven’s and Mr Fridman’s cases were filed within the applicable limitation periods and only after the defendants (HarperCollins) had refused to discuss a range of remedial actions suggested by lawyers acting for Mr Aven and Mr Fridman,” the spokesperson added.

Rosneft did not respond to a request for comment. Chigirinsky could not immediately be reached for comment through his lawyers.

Jessica Ní Mhainín at the Index on Censorship, a group that campaigns for free expression, said London’s courts were becoming the venue of choice for legal action designed to “quash critical journalism, not only in the UK, but around the world”.

She added that the UK is harbouring a global industry that profits from such lawsuits against journalists, and called for the introduction of reforms.

FT : Berkshire Hathaway swings to $11.7bn profit in first quarter

Berkshire Hathaway swings to $11.7bn profit in first quarter
Cash pile at Warren Buffett’s investment company balloons to $145.4bn while $6.6bn was spent on stock buybacks


Warren Buffett’s Berkshire Hathaway reported a surge in profits in the first quarter as its investment portfolio swelled in size alongside a broad market rally and its sprawling group of businesses rebounded from the depths of the crisis a year ago.

The company said on Saturday that it had swung to a profit of $11.7bn from a loss of $49.7bn a year earlier, figures heavily influenced by the shifts in its $282bn stock portfolio which includes big names such as Apple and Bank of America.

Its core operating businesses, which include the insurer Geico, BNSF railroad and the Dairy Queen ice cream chain, also improved. Operating earnings from those businesses, Buffett’s preferred measure of Berkshire’s performance, rose 19.5 per cent from the year before to $7bn.

The company, often seen as a microcosm of the US economy, was among the big beneficiaries of a housing boom that has gripped much of the country. Sales across its building products unit, which includes modular home builder Clayton Homes and the paint seller Benjamin Moore, rose 16 per cent while the division’s pre-tax profits jumped by more than a third.

Berkshire wrote in its quarterly filing with US securities regulators that many of its subsidiaries “experienced significant recoveries” and that “revenues and earnings in the first quarter of 2021 for these businesses were considerably higher than in the first quarter of 2020”.


It also said that it had passed rising material prices on to its clients as inflationary pressures began to bite, a phenomenon that has left investors and policymakers at the Federal Reserve in intense debate as they question how long cost increases will persist.

The company’s closely scrutinised cash pile ballooned to $145.4bn from $138.3bn at the end of 2020.

Berkshire disclosed that it had spent $6.6bn in the quarter buying back its class A and B common stock, as it continued to direct much of its firepower towards share repurchases.

Its financial accounts showed it was a net seller of stock in the quarter, underscoring the difficulty Buffett has had in finding attractive acquisition targets — whether a share of a company or an outright business.

Shifts in the economy were evident in the performance of businesses Berkshire owns.

Profits at BNSF rose 5 per cent, helped by higher freight volumes of consumer goods, while the fall in demand for aircraft hit aerospace parts manufacturer Precision Castparts.

Sales at Precision Castparts, which Berkshire wrote down in value last year amid the pandemic, dropped 36 per cent. It is a trend Berkshire said it expected would persist, even as domestic air travel increases.

The winter freeze that hit Texas in February caused $460m in losses for two of Berkshire’s insurance units and was the reason the company cited for a drop-off in profitability at its Lubrizol speciality chemicals unit, which had to shut down several of its plants because of the cold.


The results come hours before Buffett and a trio of Berkshire executives address the company’s shareholders at an annual meeting that could prove to be the most divisive in years.

A host of large stockholders, including the California employee pension fund Calpers and asset manager Neuberger Berman, have warned they will withhold votes from some directors sitting on the Berkshire board as they push the conglomerate to adopt social and environmental-focused stockholder proposals.

Buffett will be joined by Berkshire vice-chairs Charlie Munger, Greg Abel and Ajit Jain at the annual meeting, which this year will take place from Los Angeles, far from the company’s usual downtown Omaha locale.

The coronavirus has for the second year prevented an annual gathering that typically drew tens of thousands of Berkshire shareholders to the midwest US city. The sojourn is a rite of passage for many investors, who come to listen to the so-called Oracle of Omaha’s investment and life advice.

Berkshire’s class A shares have climbed 18.6 per cent so far this year and closed on Friday at $412,500 a piece. The gain puts the conglomerate ahead of the 11.8 per cent total return of the benchmark S&P 500, setting a path for Berkshire to eclipse the performance of the broad market in a given year for the first time since 2018.