Berkshire Hathaway Profits Tumble
Berkshire Hathaway reported a drop in quarterly profit, a notable stumble for the massive conglomerate. The decline was blamed on weakness in its insurance operations due to catastrophic losses and a writedown on its Occidental Petroleum stake. The results are seen as a bellwether for the pressures facing the broader U.S. economy.
The drop in operating profit to $10.2 billion for the quarter represents a steep 29% decline from the same period a year prior. Full-year operating earnings for 2025 also fell to $44.49 billion from $47.44 billion in 2024. A significant driver of this decline was a 54% plunge in insurance underwriting profits. The global insurance industry faced a heavy toll from natural disasters in 2025, with worldwide insured losses reaching an estimated $129 billion. A major event contributing to this was the January wildfires in Los Angeles, which alone accounted for an estimated $41 billion in insured losses. The writedown on the Occidental Petroleum stake amounted to $4.5 billion. Berkshire began its significant investment in Occidental in 2019, providing $10 billion to help finance the acquisition of Anadarko Petroleum. This was seen as a long-term bet on oil prices and the productivity of the Permian Basin. These results mark the first full quarter since Greg Abel officially took over as CEO in January 2026. Abel, a Canadian-born executive, has been with Berkshire since 2000, previously serving as the head of Berkshire Hathaway Energy. In his first letter to shareholders, he pledged to uphold the company's long-standing principles of financial discipline and capital allocation. Despite the downturn in insurance, other key segments of the conglomerate showed mixed results. The BNSF railroad business saw its operating earnings for 2025 grow to $5.5 billion. However, revenue growth across Berkshire's manufacturing, retail, and service businesses was described as "pretty tepid," reflecting broader economic pressures. The company's massive cash hoard saw a slight dip but remained substantial at $373.3 billion at the end of 2025. For the sixth consecutive quarter, Berkshire did not repurchase any of its own shares, a move that has drawn attention from investors and analysts.
