Berkshire Profit Drops
Berkshire Hathaway reported a drop in quarterly profits, driven by weak performance in its insurance operations and a significant writedown on its Occidental Petroleum investment. The results highlight the impact of elevated catastrophe losses and volatility in the energy sector.
The fourth-quarter operating profit saw a steep 30% decline to $10.2 billion from $14.53 billion a year earlier. For the full year, operating profit also fell 6% to $44.49 billion. This report marks the final quarter with Warren Buffett as CEO, with his successor Greg Abel officially taking the helm at the start of 2026. A significant driver of the downturn was a 54% plunge in insurance underwriting profits, which dropped to $1.56 billion for the quarter. The company's insurance investment income also slid by nearly 25%. These results reflect a challenging period of increased catastrophe losses, including the impact of Hurricane Melissa in the Caribbean and severe flooding in Southeast Asia during the latter part of the year. Berkshire recorded a $4.5 billion writedown on its investments, including its stake in Occidental Petroleum. The company stated the writedown was due to a decline in the oil company's stock price that it no longer considered "temporary." This move comes as the broader energy sector faced headwinds in late 2025, with global oil demand growth slowing and supply outpacing demand. Despite the writedown, Berkshire has indicated it does not intend to sell its Occidental shares. Occidental Petroleum itself reported mixed fourth-quarter results, beating earnings estimates but missing on revenue. The company has been focused on reducing its debt. In his first annual letter to shareholders, new CEO Greg Abel paid tribute to Buffett and pledged to maintain the company's disciplined investment culture. Abel faces the challenge of strategically deploying Berkshire's substantial cash hoard, which stood at $373.3 billion at the end of 2025. For the sixth consecutive quarter, Berkshire did not repurchase any of its own shares. The company's Class A shares saw a 10% rise in 2025, which lagged the 16.4% advance of the S&P 500. While the insurance and investment arms faced difficulties, Berkshire's manufacturing, retail, and service businesses saw modest gains. However, the company noted "sluggish" consumer demand affecting some of its well-known brands.
