Berkshire Hathaway Profits Drop
Berkshire Hathaway reported a drop in quarterly profit, a notable stumble for the massive conglomerate. The dip was blamed on weakness in its insurance operations, which faced elevated claims, and a significant writedown of its investment in Occidental Petroleum. The results signal that even Berkshire isn't immune to macroeconomic headwinds and energy sector volatility.
A deeper look at the numbers shows operating earnings, a metric closely watched by investors, fell by roughly 30% to $10.2 billion from $14.53 billion in the same quarter of the previous year. Full-year operating profit also saw a decrease, dropping 6% to $44.49 billion. The conglomerate's insurance businesses, a core part of its operations, faced significant headwinds. Insurance underwriting profits experienced a steep 54% decline, falling to $1.56 billion from $3.41 billion a year earlier. At GEICO, pre-tax underwriting profit was nearly halved due to increased advertising spending and a rise in accident claims. A major factor in the profit decline was a $4.5 billion writedown on Berkshire's investment in Occidental Petroleum. The company indicated this was due to a belief that the recent drop in the oil company's stock price was not "temporary." This was the second significant writedown in 2025, following a separate impairment on its Kraft Heinz investment. Despite the profit drop, Berkshire Hathaway's cash hoard remains substantial, ending 2025 at $373.3 billion. This provides the new CEO, Greg Abel, with significant capital for potential acquisitions. For the thirteenth consecutive quarter, Berkshire was a net seller of stocks and did not repurchase any of its own shares for the sixth straight quarter. This earnings report marks a transitional period for the company, being the last under Warren Buffett's tenure as CEO. In his first annual letter to shareholders, new CEO Greg Abel paid tribute to Buffett and pledged to maintain the company's long-standing investment discipline. While the core insurance and investment segments showed weakness, other parts of the conglomerate demonstrated some resilience. The BNSF railroad saw a 6% rise in fourth-quarter profit, and the manufacturing, retail, and service businesses experienced a modest 3% gain in the same period. However, Berkshire Hathaway Energy saw a 5% dip in profits. Consumer demand was described as "sluggish," impacting some of Berkshire's well-known brands. This contributed to revenue declines for companies like Duracell, Fruit of the Loom, and Squishmallows maker Jazwares.
