OMAHA, NEB. — In his closely watched annual letter to shareholders, Berkshire Hathaway Chairman Warren Buffett said its businesses related to home construction struggled again last year, though he predicted a housing recovery could begin within a year.
Buffett's letter, released over the weekend, hardly mentions Berkshire's furniture stores — Nebraska Furniture Mart and its Homemakers division, R.C. Willey, Star Furniture and Jordan's. The accompanying annual report noted that 2010 revenue for Berkshire's retailing business, which also include jewelry stores and See's Candies, increased 2% from the year before to $2.9 billion.

Pretax earnings for the group of businesses were up 22% to $197 million "due to the modest increase in sales and ongoing cost containment efforts."

In his letter, Buffet noted that Berkshire's businesses related to home construction - Johns Manville, MiTek, Shaw Inds. and Acme Brick — "maintained their competitive positions, but their profits are far below the levels of a year ago."

"A housing recovery will probably begin with a year or so," Buffet said. "In any event, it is certain to occur at some point," and Berkshire has been preparing with capital investment. Among other things, he said carpet maker Shaw will spend $200 million this year on plant and equipment, "all of it situated in America."

Towards the end of his letter, Buffett does gives a nod to Nebraska Furniture Mart, noting that last year, the retailer rang up $33.3 million in business during its sale that takes place during the Berkshire annual meeting, "a volume that — as far as I know — exceeds the one-week total of any retail store anyplace."

Berkshire reported net earning attributable to Berkshire Hathaway of $12.97 billion in 2010, up from $8.06 billion the year before. In his letter, however, Buffett tells readers that operating earnings are a better guide and to ignore its net income figure.

"Regulations require that we report it to you, But if you find reporters focusing on it. That will speak more to their performance than ours," he said.