Berkshire Hathaway Faces Earnings Drop Amid Kraft Heinz Write-Down
Omaha, Monday, 4 August 2025.
Berkshire Hathaway’s earnings fell slightly, impacted by a $3.8 billion write-down of Kraft Heinz. Investor concerns rise amid ongoing stock selling and absence of share buybacks.
Berkshire Hathaway’s Financial Decline and Investor Reactions
Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) recently reported a slight decrease in its operating earnings and a significant write-down of $3.8 billion in its investment in Kraft Heinz (NASDAQ: KHC) [1][2][3]. This occurred amidst an ongoing trend of stock-selling and a halt in the company’s stock repurchase program, which has sparked concern among investors. These financial activities have led to a notable drop in Berkshire Hathaway’s stock prices, shedding over 12% since its peak in early May when it was announced that Greg Abel would succeed Warren Buffett as CEO by year-end [1].
Financial Performance Details
In the second quarter of 2025, Berkshire Hathaway’s operating profit fell 4% to $11.16 billion compared to the same quarter last year, driven primarily by a decline in insurance underwriting performance [1][2]. However, profits from its railroad, energy, manufacturing, service, and retail segments showed year-over-year increases. The decline in earnings was compounded by a $3.8 billion impairment on the Kraft Heinz stake due to its consistent underperformance, which surprised many market observers [1][3].
Strategic Shifts and Market Impacts
Despite a cash reserve of $344.1 billion, nearing a record high, Berkshire Hathaway has been a net seller of stocks for the 11th consecutive quarter, divesting $4.5 billion worth of equities in the first half of 2025 [3]. The decision to not engage in share buybacks, despite the drop in share value, was particularly criticized by investors who anticipated repurchases as a potential catalyst for stock price recovery. Analyst Kyle Sanders from Edward Jones noted the lack of fresh investment activity or acquisitions, viewing this as a missed opportunity to build short-term investor confidence [1][3].
Implications of Kraft Heinz Write-Down
The write-down of the Kraft Heinz investment marks a clear acknowledgment of the challenges faced by branded food companies amidst growing market competition. According to Bill Stone, Chief Investment Officer of The Glenview Trust Company, Warren Buffett has admitted overpaying for the Kraft Heinz stake, which was valued higher than its market value in recent financial records. The consumer goods giant has been contemplating a spinoff of its grocery business, a move that could potentially reshape its market positioning and affect Berkshire’s long-standing strategy [1][3].