Berkshire Hathaway Earnings Fall Amid Kraft Heinz Writedown; Buffett Confirms Succession Plans

Berkshire Hathaway reported a sharp decline in second-quarter profit after recording a $3.76 billion writedown on its investment in Kraft Heinz, as the food company considers major changes to its business structure. The conglomerate posted net earnings of $12.37 billion, or $8,601 per Class A share, down from $30.25 billion, or $21,122 per share, a year earlier. The decrease was largely attributed to smaller paper investment gains compared to the previous year, when Berkshire had sold a significant portion of its Apple holdings.

Despite the headline drop, Berkshire's operating earnings—which exclude investment gains—fell only slightly to $11.16 billion, or $7,759.58 per Class A share, compared to $11.60 billion, or $8,072.16 per share, a year ago. These results surpassed analyst expectations, as FactSet Research had forecast earnings per share of $7,508.10.

Most of Berkshire's diverse businesses, including insurance, railroads, utilities, and manufacturing, performed well despite economic uncertainty and trade tariffs. The company continues to hold a substantial cash reserve of $344.1 billion, though this figure dipped slightly from the previous quarter. Warren Buffett told shareholders in May that he has not found suitable acquisition targets at attractive valuations.

Berkshire, which owns over 27% of Kraft Heinz, saw its representatives resign from the Kraft Heinz board earlier this year, ahead of the food company's announcement that it is considering strategic changes, such as spinning off brands. Buffett has previously acknowledged overpaying for the Kraft Heinz investment and underestimating challenges from changing consumer preferences and competition from private label products.

At the company's annual meeting, Buffett announced he will step down as CEO at the end of the year, with Vice Chairman Greg Abel set to succeed him. Buffett will remain as Chairman. The company did not repurchase any of its shares this quarter, despite a more than 12% decline in share price since the retirement announcement.

Attention has also turned to Berkshire's BNSF railroad following news of a major rail merger elsewhere in the industry. CFRA Research analyst Cathy Seifert noted that Buffett typically avoids deals driven by market speculation, saying, "He wants to do it because he found an undervalued franchise -- not because the market says you need to do a deal." BNSF reported a 19% increase in operating profit to $1.47 billion for the quarter, aided by cost reductions and a modest rise in shipments.