Berkshire Hathaway Profits Drop
Warren Buffett's Berkshire Hathaway reported a drop in quarterly profit, dragged down by weakness in its insurance operations and a writedown of its Occidental Petroleum stake. The results reflect broader industry headwinds, including higher claims costs and volatile energy markets. This highlights the growing challenges even for diversified conglomerates in the current economic climate.
The fourth-quarter operating profit saw a significant 30% drop to $10.2 billion from $14.53 billion a year earlier. A deeper look into the insurance operations reveals that underwriting profits plummeted by a stark 54% to $1.56 billion, while income from insurance investments also slid by nearly 25% to $3.1 billion. The reported earnings were impacted by a substantial $4.5 billion impairment on Berkshire's investments in Kraft Heinz and Occidental Petroleum. The writedown on the Occidental stake was triggered by a decline in the oil company's stock price that Berkshire no longer considers temporary. This is despite the fact that Berkshire has no current intention of selling its shares. Berkshire's history with Occidental Petroleum dates back to 2019, when it provided $10 billion in financing for Occidental's acquisition of Anadarko Petroleum. Since then, Berkshire has become a major shareholder, owning over 28% of the company as of early 2025. While the insurance and investment segments faced headwinds, other parts of the conglomerate showed mixed results. The BNSF railway reported an operating income of $1.35 billion, while Berkshire Hathaway Energy contributed $691 million. The manufacturing, service, and retailing businesses collectively brought in $3.37 billion in operating income. This earnings report marks a transitional period for the company, being the last under Warren Buffett's tenure as CEO. His successor, Greg Abel, released his first annual letter to shareholders, reassuring them of his commitment to maintaining Berkshire's established culture of financial discipline and capital allocation. Despite the drop in profits, Berkshire Hathaway's cash hoard remains substantial, ending the year at $373.3 billion. This massive cash pile provides new CEO Greg Abel with significant "dry powder" for potential future acquisitions and investments. The company did not, however, repurchase any of its own shares for the sixth consecutive quarter.
