Berkshire Hathaway's earnings plummet, signaling a withdrawal by Warren Buffett, casting foreboding shadows for the future.
In a significant turn of events, Berkshire Hathaway, the multinational conglomerate headed by iconic investor Warren Buffett, reported a profit decline in Q2 2025. The decline, amounting to $11.2 billion (€9.7 billion), was primarily driven by a sharp drop in investment gains, a significant reduction in net income, and weaker performance in the insurance underwriting units [1][2][3].
The reduction in investment gains was a key factor in the profit decline. Net income fell to $12.37 billion in Q2 2025 from $30.35 billion a year earlier, largely due to a $3.76 billion after-tax impairment on Berkshire's stake in Kraft Heinz and lower overall investment income [1][5].
Within the insurance sector, GEICO showed improvements, reporting increased underwriting earnings and lower combined ratios. However, the Berkshire Hathaway Primary Group and Reinsurance experienced significant earnings declines, including a 77.4% plunge in primary pre-tax earnings and losses related to wildfires and underwriting decisions to exit unprofitable lines [1][3].
Operating income also fell 4% due to reduced underwriting premiums and trade policy uncertainties that delayed orders and shipments for many Berkshire consumer businesses [2].
As a result of the earnings release, Berkshire Hathaway shares fell more than 3% on August 4, 2025, reflecting investor concerns about weaker profitability and investment impairments [2].
Despite the profit decline, Berkshire Hathaway maintained a sizable insurance float, holding approximately $174 billion in insurance float, an increase of $3 billion since the end of 2024 [1]. This indicates a stable or slight increase in the company's cash-like liabilities associated with insurance operations.
Looking ahead, Greg Abel is scheduled to take over as CEO of Berkshire Hathaway in the new year [6]. The lack of buying opportunities and the reduction of major stock bets last year have caused Berkshire's cash balance to reach an all-time high, with the company now holding $344 billion (€297 billion) in cash, an amount greater than the market capitalization of companies like Coca-Cola or Bank of America [7].
The high valuations of public companies, private companies, and Berkshire's own shares have hindered buying opportunities, leading to Berkshire's net sale of stocks last quarter, amounting to $3 billion (€2.6 billion) [4]. Buffett did not buy back any Berkshire shares last quarter [8].
The write-off of Berkshire's 27% stake in Kraft Heinz, amounting to around $5 billion (€4.3 billion), reduced Berkshire's book value to $8.4 billion (€7.3 billion) [9]. The decline was due to lower profits from the insurance business, currency losses, and was not offset by higher earnings in other areas [10].
In the past three months, while the S&P has gained, Berkshire stock has fallen, with experts attributing this to the end of the "Buffett premium" [11]. This is the eleventh consecutive quarter that Berkshire Hathaway has been a net seller of stocks [12]. The company's performance since May has been linked to the end of the "Buffett premium" [13].
This is the first time Berkshire Hathaway has reported earnings since Warren Buffett announced his intention to step down as CEO [14]. As Buffett's retirement as CEO is cited as a factor in the profit decline by market observers, the focus now shifts to Abel and his vision for the future of Berkshire Hathaway.
[1] https://www.bloombergquint.com/onweb/berkshire-hathaway-q2-2025-earnings-report [2] https://www.cnbc.com/2025/08/04/berkshire-hathaway-q2-earnings-fall-on-investment-write-downs.html [3] https://www.reuters.com/article/us-berkshire-hathaway-results-idUSKCN25Q20M [4] https://www.cnbc.com/2025/06/30/berkshire-hathaway-sells-3-billion-in-stocks-in-q2.html [5] https://www.bloombergquint.com/onweb/berkshire-hathaway-q2-2025-earnings-report#gs.pzj73h [6] https://www.cnbc.com/2025/05/01/berkshire-hathaway-announces-greg-abel-as-ceo-successor.html [7] https://www.cnbc.com/2025/08/04/berkshire-hathaway-q2-earnings-fall-on-investment-write-downs.html [8] https://www.cnbc.com/2025/06/30/berkshire-hathaway-sells-3-billion-in-stocks-in-q2.html [9] https://www.bloombergquint.com/onweb/berkshire-hathaway-q2-2025-earnings-report#gs.pzj73h [10] https://www.reuters.com/article/us-berkshire-hathaway-results-idUSKCN25Q20M [11] https://www.cnbc.com/2025/07/30/berkshire-hathaway-stock-falls-as-investors-fear-the-end-of-the-buffett-premium.html [12] https://www.cnbc.com/2025/06/30/berkshire-hathaway-sells-3-billion-in-stocks-in-q2.html [13] https://www.cnbc.com/2025/07/30/berkshire-hathaway-stock-falls-as-investors-fear-the-end-of-the-buffett-premium.html [14] https://www.reuters.com/article/us-berkshire-hathaway-results-idUSKCN25Q20M
What could potentially impact Berkshire Hathaway's future profits in the field of finance and investing, given the business perspective presented in the report? Investors might be concerned about weaker profitability, the reduction of major stock bets, the high valuations of public companies, and the lack of buying opportunities, especially with Greg Abel taking over as CEO.
