Profits drop at Warren Buffett's Berkshire Hathaway as it writes down
its Kraft Heinz investment
[August 04, 2025] By
JOSH FUNK
OMAHA, Neb. (AP) — Warren Buffett's company reported less than half as
much profit in the second quarter as it took a $3.76 billion writedown
on the value of its stake in Kraft Heinz, as that iconic food producer
considers largely undoing the merger that Berkshire Hathaway helped
bankroll.
Berkshire said it earned $12.37 billion, or $8,601 per Class A share,
during the quarter. That's down from $30.248 billion, or $21,122 per
Class A share, a year ago, because it recorded a much smaller paper
investment gain this year.
Berkshire's earnings can swing wildly from quarter to quarter because it
has to record the current value of its massive investment portfolio even
though it doesn't sell most of the stocks. That's why Buffett has long
recommended that investors pay more attention to Berkshire's operating
earnings, which exclude those investment gains. Although last year
Berkshire did surprise shareholders by selling off a huge chunk of its
Apple stake which inflated the investment gains then.
By that measure, Berkshire's operating earnings were only down slightly
at $11.16 billion, or $7,759.58 per Class A share. That compares with
$11.598 billion, or $8,072.16 per Class A share, a year ago. Most of
Berkshire's myriad assortment of companies — major insurers like Geico,
BNSF railroad, a group of utilities and a collection of manufacturing
and retail businesses — generally performed well despite the uncertainty
about the economy and President Donald Trump's tariffs.
The four analysts surveyed by FactSet Research expected Berkshire to
report earnings per Class A share of $7,508.10, so the Omaha,
Nebraska-based conglomerate's results were ahead of that.
Berkshire owns more than 27% of Kraft Heinz' stock and, for years, it
had representatives on the company's board. Buffett has said previously
that he believes the company's iconic brands will do well over time, but
in hindsight, he overpaid for the investment and underestimated the
challenges branded foods face from retailers and the growth of private
label products.
This spring, Berkshire's representatives resigned from the Kraft Heinz
board shortly before the company announced it is exploring strategic
options that may include spinning off a large part of its portfolio of
brands.
Over the years since Berkshire helped Kraft buy Heinz in 2015, the
company has been hurt by changing consumer tastes and a shift toward
healthier options than Kraft’s core collection of processed foods.
Another writedown could be coming in the future because CFRA Research
analyst Cathy Seifert pointed out that Berkshire's holding of 28% of
Occidental Petroleum's stock, which is currently valued at about $5.3
billion less than the $16.5 billion that Buffett paid for it.
Buffett's is still sitting on a massive pile of $344.1 billion in cash,
although the company's reserves dipped slightly from the $347.7 billion
cash it was holding at the end of the first quarter. Buffett told
shareholders in May he just isn't finding any attractive deals for
companies he understands.
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 Buffett surprised shareholders at
the annual meeting when he announced that he plans to give up the
CEO title at the end of the year and hand over operations to Vice
Chairman Greg Abel, but Buffett will remain Chairman.
Berkshire shareholders might be disappointed that the company didn't
repurchase any of its shares this quarter, even though the price has
fallen more than 12% since just before Buffett announced his
retirement. But investor Chris Ballard, who is managing director at
Check Capital, said he wasn't surprised at the lack of buybacks
because even after the recent drop, Berkshire's stock is still
selling at a premium compared to the value of its businesses.
Many investors are watching Berkshire's BNSF closely after rival
Union Pacific announced a plan to buy Norfolk Southern earlier this
week to create the nation's first transcontinental railroad. The
speculation is that BNSF needs to pursue a merger with eastern rail
CSX to be able to compete.
But Seifert said it isn't Buffett's style to jump into a deal just
because the market thinks he should. Over the decades, he has built
Berkshire by finding strong companies selling for less than they are
worth. CSX is trading near its 52-week high at $35.01 amid all the
deal speculation.
“He wants to do it because he found an undervalued franchise -- not
because the market says you need to do a deal,” Seifert said. “I
think one of the reasons why that cash hasn’t been deployed is that
valuations run through the Berkshire M-and-A model tend to be too
rich. But if there’s a logical case to be made they’ll accept it.”
And BNSF appears to be doing fine right now on its own. The railroad
recorded a 19% jump in its operating profit this quarter at $1.47
billion as it cut costs and delivered about 1% more shipments.
Berkshire's insurance results disappointed a bit as it appeared the
company might be pulling back from writing as much property
insurance at a time when premiums aren't as attractive. Even in
areas where it is growing, like Geico, Seifert said Berkshire lagged
behind peers such as Progressive and Allstate. Berkshire normally
pulls back on writing insurance when it doesn't like the premiums.
“The insurance business has struggled a bit. I would say the
takeaways for me is on that front, they’re doing less property and
casualty insurance,” said Ballard, who's firm counts Berkshire as
its largest holding.
Berkshire said it's underwriting operating profit dipped to just
below $2 billion in the quarter from last year's $2.26 billion.
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