24H｜Berkshire Hathaway Shares Slipped 2% As Q2 Profit Drops 59% Amid Investment Losses, Weaker Insurance Results

Berkshire Hathaway reported a 59% drop in second-quarter net earnings to $12.45 billion, down from $30.49 billion a year earlier, driven by a writedown on its Kraft Heinz stake and lower investment gains, its financial statement showed on Saturday.

Berkshire shares slipped 2% in overnight trading.

Q2 earnings

• The Warren Buffett-led conglomerate took a $3.76 billion after-tax writedown on its 27.4% stake in Kraft Heinz, acknowledging that the decade-long investment had failed to meet expectations.

• This marks the second writedown by Berkshire on the food giant, after a $3 billion charge in 2019 that Buffett called one of his biggest investment missteps.

• The company had valued its stake above market prices, but cited economic uncertainty and its long-term plans to remain a shareholder as reasons why the gap was “not temporary.”

• Quarterly revenue declined 1% to $92.5 billion from $93.6 billion a year ago. Operating earnings fell 4%, driven partly by lower insurance premiums.

• The pre-tax impairment came to $5 billion, following Kraft Heinz’s announcement that it would explore strategic alternatives, including a possible breakup.

• Buffett has long downplayed the importance of unrealized investment gains and losses in Berkshire’s earnings, noting that they often don’t reflect the firm’s underlying performance, especially for stocks it doesn’t intend to sell.

Kraft Heinz drag

Kraft Heinz, the maker of brands including Oscar Mayer, Kool-Aid, Velveeta, and Jell-O, continues to face headwinds as consumers shift toward healthier options and private-label alternatives.

The company's operating income dropped to $11.16 billion in the second quarter, down from $11.6 billion a year earlier, impacted by $877 million in foreign exchange losses tied to a weaker dollar.

Total net earnings—including unrealized gains and losses from investments in companies such as Apple and American Express—fell sharply to $12.37 billion from $30.35 billion a year ago.

Cash pile swells, stock buybacks stall

Berkshire Hathaway ended the quarter with a near-record cash pile of $344.1 billion and was a net seller of stocks for the 11th consecutive quarter. As of mid-July, it had not repurchased any of its own shares since May 2024.

The conglomerate also holds a 28.1% stake in Occidental Petroleum, valued at $5.3 billion above its fair value, though it said no writedown was necessary.

Insurance, railroads and energy

Insurance underwriting profit at Berkshire Hathaway fell 12% in the second quarter, weighed down by weaker results from reinsurance operations and smaller insurance units. GEICO, the company’s flagship auto insurer, posted a 2% increase in pre-tax underwriting income, as a 5% rise in premiums offset a modest uptick in claims.

GEICO continues to lose market share to State Farm and Progressive while focusing on improving underwriting quality and reducing headcount. Analysts caution that rising tariffs could inflate car parts costs, potentially increasing claims-related losses, according to Reuters.

BNSF Railway, another major Berkshire subsidiary, boosted quarterly profit by 19% through cost-cutting measures and lower fuel expenses, despite flat revenue and shipment volume.

Berkshire Hathaway Energy saw earnings rise 7% and is currently assessing how the recently signed “One Big Beautiful Bill” by President Donald Trump may impact the feasibility of its renewable energy, storage, and carbon-neutral technology projects.