Berkshire Hathaway, the multinational conglomerate led by legendary investor Warren Buffett, has reported a sharp 59% drop in its second-quarter net profit, largely attributed to a significant write-down on its long-held investment in Kraft Heinz. The company’s net income for the quarter was $12.37 billion, a stark decrease from the $30.25 billion reported in the same period last year.
The dramatic decline in net profit was primarily driven by two factors: a substantial decrease in unrealized investment gains and a $3.76 billion after-tax impairment charge on its stake in Kraft Heinz. Under accounting rules, Berkshire is required to report unrealized gains and losses from its vast stock portfolio, which can cause significant fluctuations in quarterly results. The company’s operating earnings, a metric Warren Buffett has consistently urged investors to focus on for a more accurate picture of business performance, saw a more modest decline of 4% to $11.16 billion, still surpassing Wall Street’s expectations.
The impairment on Kraft Heinz marks the second major write-down for Berkshire on this investment, which was a key part of the 2015 merger that created the packaged food giant. Buffett has previously acknowledged overpaying for the company, and the latest write-down comes as Kraft Heinz explores strategic alternatives for its business. This move by Berkshire could signal a potential future exit from the position. Despite the investment setbacks, some of Berkshire’s core businesses showed resilience. For example, the BNSF railroad posted a 19% increase in operating profit, driven by cost controls and higher shipment volumes.
Berkshire Hathaway also ended the quarter with a near-record cash pile of $344.1 billion, a figure that highlights the company’s cautious approach to capital deployment in the current market. The conglomerate was a net seller of stocks for the 11th consecutive quarter and did not engage in any share repurchases, a trend that suggests Buffett and his team see limited attractive opportunities at present valuations. This is consistent with Buffett’s historical commentary on market conditions, and his occasional admissions of past investment “mistakes,” a theme he has discussed openly in his annual letters to shareholders.
