Berkshire Hathaway Profits Fall
Warren Buffett’s Berkshire Hathaway reported a drop in quarterly profits, driven by weak performance in its core insurance operations. The conglomerate's results were also hit by a significant writedown in its investment in Occidental Petroleum, reflecting a more challenging macroeconomic environment.
The conglomerate's operating earnings for the fourth quarter fell by over 29% to $10.2 billion, a significant drop from $14.56 billion in the same period of the prior year. This decline was a key feature of the final quarterly report under Warren Buffett's tenure as CEO. A major contributor to the downturn was the insurance division, where underwriting profits plunged 54% to $1.56 billion from $3.41 billion a year earlier. Investment income from the insurance arm also saw a substantial decrease of nearly 25%. The company booked a significant $4.5 billion impairment charge related to its investments in Occidental Petroleum and Kraft Heinz. Despite the writedown on Occidental, Berkshire has indicated it does not intend to sell its shares in the oil company. This earnings report marks a transitional period for the company, with Greg Abel taking over as CEO at the start of 2026. In his first annual letter to shareholders, Abel vowed to continue the financial discipline and culture established by Buffett, who remains as chairman. Even with the weaker profits, Berkshire Hathaway's cash reserves remain substantial, ending the year at $373.3 billion. This provides the new leadership with considerable capital for potential future acquisitions. For the full year of 2025, operating earnings totaled $44.49 billion, a decrease from $47.44 billion in the previous year. Net income for the full year also saw a significant 25% drop to $66.97 billion from $89 billion in 2024. Interestingly, for the sixth consecutive quarter, the company did not engage in any share buybacks. This was also the thirteenth straight quarter where Berkshire was a net seller of stocks. In 2025, Berkshire Hathaway's Class A shares saw a 10% rise, which lagged the 16.4% advance of the S&P 500.
