Warren Buffett talks housing, successor in annual shareholders’ letter

In his annual letter to shareholders, Berkshire Hathaway Inc. CEO Warren Buffett, 81, said that, with the exception of the housing industry, the US economy has bounced back.

"Though housing-related businesses remain in the emergency room, most other businesses have left the hospital with their health fully restored," Buffett wrote in a 22-page letter in the conglomerate’s 2011 Annual Report, Reuters reported.

He noted that Berkshire's five largest non-insurance businesses, posted record profits last year and are on target to achieve the same this year, surpassing $10 billion in combined earnings, Reuters reported. Also, he said, "the banking industry is back on its feet.”

According to Reuters:

At this delicate stage in the US economic recovery, his words carry weight, partly because of his successes over the years and partly from the sheer size and scope of Berkshire, which employees more than 270,000 people in nearly 80 businesses.

Buffett acknowledged he had expected a housing recovery to happen more quickly, but he was “dead wrong,” Smart Money reported.

Buffett also indicated that Berkshire’s next CEO has been picked. While he dropped some tantalizing hints about the person, he didn’t name them.

He said the Berkshire board has had “a great deal of exposure” to the person and that board members admire their “managerial and human qualities,” MarketWatch reported. He also mentioned the company has lined up two “superb” back-up candidates.

“When a transfer of responsibility is required, it will be seamless, and Berkshire’s prospects will remain bright,” Buffett said, according to MarketWatch. Last year, Buffett said his son Howie Buffett will become non-executive chairman of Berkshire in the future.

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For now, Buffett added, he and Vice Chairman Charlie Munger, 88, “continue to be in excellent health, and we love what we do.”