Warren Buffett’s Berkshire Hathaway mentioned on Saturday it took a $3.76 billion writedown on its stake in Kraft Heinz throughout the second quarter, an acknowledgment the decade-old funding hasn’t labored out.
Berkshire additionally reported a 4% decline in quarterly working revenue as insurance coverage underwriting premiums fell. The writedown and decrease positive aspects from frequent shares brought about a 59% drop in general web earnings.
Buffett’s conglomerate signaled it stays cautious about market valuations, amid uncertainty about tariffs and development within the broader financial system.
It reported a near-record $344.1 billion money stake, and bought extra shares than it purchased for an eleventh straight quarter. As of mid-July, Berkshire hadn’t repurchased any of its personal inventory since Could 2024.
Buffett, 94, has led Omaha, Nebraska-based Berkshire since 1965, although he plans to step down at year-end.
“Buyers are getting antsy and wish to search exercise, and nothing is occurring,” mentioned Kyle Sanders, an analyst at Edward Jones. “Buffett positively views the market as overvalued, and can sit again and await one thing to come back to him.”
Uncertainty about commerce insurance policies, together with tariffs, has grow to be a headwind as delayed orders and shipments led to declining income at most of Berkshire’s shopper companies.
Jazwares, which makes the favored Squishmallows plush toys, noticed income fall 38.5% within the 12 months’s first half.
Analysts seen general outcomes as lackluster.
“Berkshire and the financial system are at an inflection level,” mentioned Cathy Seifert, a CFRA Analysis analyst. “I don’t suppose the market will embrace the mix of mediocre outcomes, an absence of inventory buybacks, and Berkshire’s latest share underperformance amid a administration transition.”
Seifert and Sanders price Berkshire “maintain.”
Second-quarter working earnings fell to $11.16 billion, or about $7,760 per Class A share, from $11.6 billion a 12 months earlier. Outcomes included $877 million of forex losses because the U.S. greenback weakened.
Web earnings, together with positive aspects and losses on shares resembling Apple and American Categorical, fell to $12.37 billion from $30.35 billion. Income fell 1% to $92.52 billion.
Buffett views unrealized funding positive aspects and losses, together with on shares Berkshire has no plans to promote, as typically meaningless to understanding his firm.
The $3.76 billion after-tax writedown for Berkshire’s 27.4% Kraft Heinz stake, equal to $5 billion earlier than taxes, adopted the struggling meals firm’s announcement it could contemplate strategic options, which may embrace a breakup.
Berkshire had carried Kraft Heinz on its books at above-market worth however mentioned financial and different uncertainties, and its longer-term plans to stay an investor, made the hole “other-than-temporary.”
The writedown is Berkshire’s second for Kraft Heinz, following a $3 billion writedown in 2019.
Buffett acknowledged on the time that Berkshire overpaid within the 2015 merger of Kraft Meals and H.J. Heinz, considered one of his largest funding missteps.
Kraft Heinz has suffered as extra customers favor more healthy and private-label options. Its roughly 200 manufacturers embrace Oscar Mayer, Kool-Help, Velveeta and Jell-O.
Berkshire additionally carries one other huge funding, its 28.1% stake in Occidental Petroleum at $5.3 billion above truthful worth, however reported no want for a writedown.
Shares of Berkshire have fallen greater than 12%, and lagged the S&P 500 by about 22 share factors, since Buffett introduced on Could 3 he would step down as chief government at 12 months finish.
Vice Chairman Greg Abel, 63,will succeed him, although Buffett will stay chairman.
Analysts mentioned the premium embedded in Berkshire’s inventory value due to the presence of Buffett, arguably the world’s most well-known investor, has eroded, whereas development could gradual within the insurance coverage sector, a serious Berkshire revenue middle.
The lack of latest investments has additionally been a drag. Analysts imagine Berkshire’s BNSF unit may purchase CSX to create one other transcontinental railroad, after Union Pacific agreed final week to accumulate Norfolk Southern.
Buffett reworked Berkshire over six many years from a troubled and since-closed textile firm right into a $1.02 trillion conglomerate.
Berkshire owns a number of insurers and reinsurers, electrical utility and renewable power companies, a number of chemical and industrial firms, and acquainted shopper manufacturers resembling Dairy Queen, Fruit of the Loom and See’s Candies.
Berkshire mentioned the 12% quarterly decline in insurance coverage underwriting revenue stemmed primarily from reinsurance companies and a few smaller insurance coverage companies.
Geico, its best-known insurance coverage enterprise, noticed pre-tax underwriting revenue rise 2%, as a 5% improve in premiums offset a smaller rise in accident losses.
The automotive insurer has been ceding market share to State Farm and Progressive, whereas specializing in bettering underwriting high quality and expertise and chopping jobs.
Analysts mentioned greater tariffs may very well be a headwind for Geico if the price of auto elements rose, doubtlessly rising losses from accident claims.
BNSF can be chopping bills. Decrease gasoline prices helped increase quarterly revenue 19% achieve, although income and cargo volumes barely modified.
The power enterprise, Berkshire Hathaway Power, posted a 7% revenue improve.
Berkshire mentioned it’s evaluating the affect of the One Huge Lovely Invoice Act, signed final month by President Trump, on the “economics and viability” of its renewable power, storage and technology-neutral tasks.
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