Berkshire Hathaway Reports 30% Drop in Q4 Operating Profit
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: Newsfilter
- Operating Profit Decline: Berkshire Hathaway's operating profit fell 30% in Q4 to $10.2 billion, or approximately $7,092 per Class A share, primarily due to write-downs on investments in Kraft Heinz and Occidental Petroleum, indicating challenges in portfolio management.
- Insurance Revenue Drop: The decline in income from insurance operations reflects pressures in the overall market environment, which could impact future profitability and investment strategies, especially as Warren Buffett steps down as CEO, leaving new leadership with greater challenges.
- Strong Cash Reserves: By the end of 2025, Berkshire Hathaway reported cash reserves of $373.3 billion, providing new CEO Greg Abel with the financial power to pursue significant acquisitions, potentially altering the company's growth trajectory.
- Leadership Transition: This quarter marks Warren Buffett's last as CEO, with successor Greg Abel's appointment signaling a potential shift in strategic direction, which may affect investor confidence and expectations for future performance.
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Analyst Views on KHC
Wall Street analysts forecast KHC stock price to rise
15 Analyst Rating
0 Buy
14 Hold
1 Sell
Hold
Current: 24.570
Low
24.00
Averages
25.86
High
28.00
Current: 24.570
Low
24.00
Averages
25.86
High
28.00
About KHC
The Kraft Heinz Company manufactures and markets food and beverage products around the world through its eight consumer-driven product platforms: Taste Elevation, Easy Ready Meals, Substantial Snacking, Desserts, Hydration, Cheese, Coffee, and Meats. The Company has two reportable segments defined by geographic region: North America and International Developed Markets. Its other segments, consisting of West and East Emerging Markets (WEEM) and Asia Emerging Markets (AEM), are combined and disclosed as Emerging Markets. It manufactures its products from a wide variety of raw materials. Its brands include Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Capri Sun, Maxwell Apartment, Kool-Aid, Jell-O, Heinz, Golden Circle, Wattie’s, Plasmon, Heinz, ABC, Master, Quero, Kraft, and Pudliszki, among others. The Company’s products are sold through its own sales organizations and through independent brokers, agents, and distributors.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Berkshire Hathaway Reports Decline in 2025 Net Earnings
- Net Earnings Decline: Berkshire Hathaway reported net earnings of $66.968 billion for 2025, a significant drop of approximately 25% from $88.995 billion in 2024, highlighting the substantial impact of investment fluctuations on the company's financial health.
- New CEO Leadership Change: New CEO Greg Abel's first shareholder letter marks a pivotal transition post-Warren Buffett, with market focus on whether he will alter the strategy for deploying over $300 billion in cash reserves.
- Investment Income Fluctuations: The company recorded $30.737 billion in investment gains for 2025, down from $41.558 billion in 2024, alongside impairment charges of $8.255 billion related to Kraft Heinz and Occidental, which significantly affected overall profitability.
- Insurance Sector Performance: The insurance segment contributed $72.58 billion in earnings for 2025, although down from $90.20 billion in 2024, it remains a crucial pillar of the company's performance, underscoring the ongoing significance of the insurance industry.
See More
Berkshire Hathaway Reports 30% Drop in Q4 Operating Profit
- Operating Profit Decline: Berkshire Hathaway's operating profit fell 30% in Q4 to $10.2 billion, or approximately $7,092 per Class A share, primarily due to write-downs on investments in Kraft Heinz and Occidental Petroleum, indicating challenges in portfolio management.
- Insurance Revenue Drop: The decline in income from insurance operations reflects pressures in the overall market environment, which could impact future profitability and investment strategies, especially as Warren Buffett steps down as CEO, leaving new leadership with greater challenges.
- Strong Cash Reserves: By the end of 2025, Berkshire Hathaway reported cash reserves of $373.3 billion, providing new CEO Greg Abel with the financial power to pursue significant acquisitions, potentially altering the company's growth trajectory.
- Leadership Transition: This quarter marks Warren Buffett's last as CEO, with successor Greg Abel's appointment signaling a potential shift in strategic direction, which may affect investor confidence and expectations for future performance.
See More
Berkshire Hathaway Reports Significant Decline in Q4 Operating Earnings
- Operating Earnings Decline: Berkshire Hathaway reported Q4 operating earnings of $10.2 billion, down 29% year-over-year, primarily due to weakness in its insurance business, highlighting challenges in its diversified operations.
- Insurance Business Losses: Insurance underwriting profits plummeted 54% to $1.56 billion, while investment income fell nearly 25% to $3.1 billion, reflecting pressures in the insurance market and its impact on overall profitability.
- Annual Overall Earnings Drop: Total overall earnings for 2025 fell to $66.97 billion from $89 billion the previous year, indicating volatility in investment performance and potential implications for shareholders.
- Cash Reserves Slightly Decrease: Despite no stock buybacks, Berkshire's cash reserves dipped from $381.6 billion to $373.3 billion, demonstrating a cautious approach to capital allocation and reflecting its strategy in navigating market fluctuations.
See More
Berkshire Hathaway's Q4 Earnings Preview Post-Buffett
- Earnings Expectations: Analysts forecast Berkshire Hathaway's Q4 revenue at $92.91 billion, down from $94.92 billion year-over-year, although the company has consistently beaten revenue estimates over the past four quarters, indicating strong business resilience.
- Insurance Profit Growth: In the recently reported third quarter, operating earnings surged 34% year-over-year, primarily driven by gains in the insurance segment, and the market will be keen to see if this trend continues into Q4.
- New CEO's Debut: New CEO Greg Abel will release his first shareholder letter alongside the earnings report, with investors eager for insights on the management of over $300 billion in idle cash and potential acquisitions, as well as whether he might break tradition by signaling a dividend payment.
- Holdings Performance Analysis: At year-end, only American Express, Bank of America, and Alphabet outperformed the S&P 500's 11.4% gain among Berkshire's top ten holdings, reflecting the conglomerate's overall underperformance against the market, prompting investor interest in Abel's commentary on other key holdings.
See More
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- Sector Shift: The recommended approach is to sell off consumer staples and invest in the healthcare sector.
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- Valuation Parity: Data from FactSet reveals that the XLK ETF, which tracks the S&P 500 tech sector, currently trades at a forward P/E of about 23, while the XLP consumer staples ETF stands at around 21, indicating an unusual valuation parity that reflects diminished investor confidence in tech amid market uncertainty.
- Shift in Investor Sentiment: Wall Street has recently shifted towards more stable and reliable businesses due to fears of artificial intelligence disruption in software stocks, leading to a decline in the attractiveness of tech stocks, with Nvidia trading at a forward P/E of 23, highlighting cautious market sentiment regarding its growth prospects.
- Nvidia's Stock Response: Despite Nvidia's recent earnings report exceeding analyst expectations with strong profit and revenue growth, the stock has barely moved, indicating that the market's outlook on its future profitability has not significantly improved, potentially driving down its P/E ratio further.
- Future Valuation Trends: UBS Global Wealth Management notes that Nvidia shares have materially de-rated over the past six months due to investor concerns about uncertain ROI on AI spending and circular financing, predicting that its valuation may continue to trend lower over the next 12 months, reflecting ongoing market caution towards tech stocks.
See More
Berkshire Hathaway Reports Decline in 2025 Net Earnings
- Net Earnings Decline: Berkshire Hathaway reported net earnings of $66.968 billion for 2025, a significant drop of approximately 25% from $88.995 billion in 2024, highlighting the substantial impact of investment fluctuations on the company's financial health.
- New CEO Leadership Change: New CEO Greg Abel's first shareholder letter marks a pivotal transition post-Warren Buffett, with market focus on whether he will alter the strategy for deploying over $300 billion in cash reserves.
- Investment Income Fluctuations: The company recorded $30.737 billion in investment gains for 2025, down from $41.558 billion in 2024, alongside impairment charges of $8.255 billion related to Kraft Heinz and Occidental, which significantly affected overall profitability.
- Insurance Sector Performance: The insurance segment contributed $72.58 billion in earnings for 2025, although down from $90.20 billion in 2024, it remains a crucial pillar of the company's performance, underscoring the ongoing significance of the insurance industry.
See More
Berkshire Hathaway Reports 30% Drop in Q4 Operating Profit
- Operating Profit Decline: Berkshire Hathaway's operating profit fell 30% in Q4 to $10.2 billion, or approximately $7,092 per Class A share, primarily due to write-downs on investments in Kraft Heinz and Occidental Petroleum, indicating challenges in portfolio management.
- Insurance Revenue Drop: The decline in income from insurance operations reflects pressures in the overall market environment, which could impact future profitability and investment strategies, especially as Warren Buffett steps down as CEO, leaving new leadership with greater challenges.
- Strong Cash Reserves: By the end of 2025, Berkshire Hathaway reported cash reserves of $373.3 billion, providing new CEO Greg Abel with the financial power to pursue significant acquisitions, potentially altering the company's growth trajectory.
- Leadership Transition: This quarter marks Warren Buffett's last as CEO, with successor Greg Abel's appointment signaling a potential shift in strategic direction, which may affect investor confidence and expectations for future performance.
See More
Berkshire Hathaway Reports Significant Decline in Q4 Operating Earnings
- Operating Earnings Decline: Berkshire Hathaway reported Q4 operating earnings of $10.2 billion, down 29% year-over-year, primarily due to weakness in its insurance business, highlighting challenges in its diversified operations.
- Insurance Business Losses: Insurance underwriting profits plummeted 54% to $1.56 billion, while investment income fell nearly 25% to $3.1 billion, reflecting pressures in the insurance market and its impact on overall profitability.
- Annual Overall Earnings Drop: Total overall earnings for 2025 fell to $66.97 billion from $89 billion the previous year, indicating volatility in investment performance and potential implications for shareholders.
- Cash Reserves Slightly Decrease: Despite no stock buybacks, Berkshire's cash reserves dipped from $381.6 billion to $373.3 billion, demonstrating a cautious approach to capital allocation and reflecting its strategy in navigating market fluctuations.
See More
Berkshire Hathaway's Q4 Earnings Preview Post-Buffett
- Earnings Expectations: Analysts forecast Berkshire Hathaway's Q4 revenue at $92.91 billion, down from $94.92 billion year-over-year, although the company has consistently beaten revenue estimates over the past four quarters, indicating strong business resilience.
- Insurance Profit Growth: In the recently reported third quarter, operating earnings surged 34% year-over-year, primarily driven by gains in the insurance segment, and the market will be keen to see if this trend continues into Q4.
- New CEO's Debut: New CEO Greg Abel will release his first shareholder letter alongside the earnings report, with investors eager for insights on the management of over $300 billion in idle cash and potential acquisitions, as well as whether he might break tradition by signaling a dividend payment.
- Holdings Performance Analysis: At year-end, only American Express, Bank of America, and Alphabet outperformed the S&P 500's 11.4% gain among Berkshire's top ten holdings, reflecting the conglomerate's overall underperformance against the market, prompting investor interest in Abel's commentary on other key holdings.
See More
Investors Should Adopt a Defensive Strategy: Offload Staples and Invest in Healthcare.
- Investment Strategy: Investors are encouraged to shift their focus towards defensive stocks for better stability in uncertain markets.
- Sector Shift: The recommended approach is to sell off consumer staples and invest in the healthcare sector.
See More
Tech Stocks Valuation Approaches Consumer Staples
- Valuation Parity: Data from FactSet reveals that the XLK ETF, which tracks the S&P 500 tech sector, currently trades at a forward P/E of about 23, while the XLP consumer staples ETF stands at around 21, indicating an unusual valuation parity that reflects diminished investor confidence in tech amid market uncertainty.
- Shift in Investor Sentiment: Wall Street has recently shifted towards more stable and reliable businesses due to fears of artificial intelligence disruption in software stocks, leading to a decline in the attractiveness of tech stocks, with Nvidia trading at a forward P/E of 23, highlighting cautious market sentiment regarding its growth prospects.
- Nvidia's Stock Response: Despite Nvidia's recent earnings report exceeding analyst expectations with strong profit and revenue growth, the stock has barely moved, indicating that the market's outlook on its future profitability has not significantly improved, potentially driving down its P/E ratio further.
- Future Valuation Trends: UBS Global Wealth Management notes that Nvidia shares have materially de-rated over the past six months due to investor concerns about uncertain ROI on AI spending and circular financing, predicting that its valuation may continue to trend lower over the next 12 months, reflecting ongoing market caution towards tech stocks.
See More
