Warren Buffett’s Berkshire Hathaway reported a sobering second quarter marked by a $3.76 billion writedown on its investment in Kraft Heinz (NASDAQ: KHC), pushing net income down 59% and further signalling that one of Buffett’s most famous bets hasn’t paid off.
The writedown—equal to $5 billion before taxes—comes a decade after the merger that created Kraft Heinz, which Buffett once hailed as a long-term value play. The struggling food giant’s recent announcement of possible strategic changes, including a breakup, prompted Berkshire to revalue its 27.4% stake, deeming the gap between book value and market price “other-than-temporary.”
This marks the second major writedown on Kraft Heinz for Berkshire, which took a $3 billion charge in 2019, with Buffett admitting at the time that they had overpaid in the 2015 merger. Kraft Heinz stock remains under pressure as the company struggles to reinvent itself in a changing consumer landscape.
Quarterly operating income fell 4% to $11.16 billion, while overall net income plunged to $12.37 billion, down from $30.35 billion a year earlier. Revenue also declined 1% to $92.52 billion. The drop reflects weaker investment gains and declining underwriting premiums in Berkshire’s core insurance businesses.
Despite this, Berkshire continues to amass cash, reporting a near-record $344.1 billion in cash reserves, while also recording its 11th straight quarter of selling more stocks than it bought. The company hasn’t repurchased its shares since May 2024, underscoring Buffett’s cautious stance on current market valuations.
Berkshire’s stock has dropped over 12% since Buffett announced in May he would step down as CEO at the end of the year, with Vice Chairman Greg Abel named as his successor. The S&P 500 has outperformed Berkshire by about 22 percentage points during that period.
Analysts suggest the “Buffett premium” that long buoyed Berkshire’s stock is fading, and with slowing growth in the insurance sector—one of its primary profit engines—the company is under pressure to rekindle investor confidence.
Berkshire also holds a 28.1% stake in Occidental Petroleum (NYSE: OXY), carried on its books at $5.3 billion above fair value, but said a writedown is not currently warranted.
Meanwhile, Berkshire’s BNSF Railway unit is rumored to be eyeing CSX Corp (NASDAQ: CSX) following Union Pacific’s $72 billion acquisition of Norfolk Southern (NYSE: NSC) announced on July 29, which could reshape the U.S. rail industry.
Insurance underwriting profit declined 12%, largely due to weaker results from reinsurance operations. However, Geico posted a modest 2% profit rise, benefiting from higher premiums despite continued loss pressure. Still, Geico continues to lose market share to State Farm and Progressive as it overhauls its tech and cost structure.
BNSF posted a 19% profit increase, buoyed by lower fuel costs, and Berkshire Hathaway Energy saw a 7% gain. The company is reviewing the effects of the “One Big Beautiful Bill”, a sweeping energy and infrastructure law signed by President Donald Trump, on its investments in renewables and energy storage projects.
Even as Berkshire faces mounting headwinds, Warren Buffett remains one of the world’s richest people, with a net worth of $141.7 billion, according to Forbes. That’s despite having donated over half of his Berkshire shares to philanthropic causes over the past two decades.
After 60 years at the helm, Buffett’s planned departure marks the end of an era for a firm he turned from a faltering textile company into a $1.02 trillion conglomerate. Now, investors are watching closely to see how Berkshire adapts to a post-Buffett world—and whether its next big move is just around the corner.