Berkshire Hathaway (BRK) navigated a complex economic landscape in the second quarter, reporting a modest 4% decline in its operating profits. The conglomerate concurrently issued a stark warning regarding the escalating impact of tariffs initiated by President Donald Trump, signaling potential wide-ranging consequences across its vast business portfolio. This financial update also highlighted key strategic decisions, including a continued reduction in equity exposure and a notable absence of share repurchases, even as its own stock experienced a downturn.
- Operating profits declined 4% in the second quarter.
- Issued a warning regarding the escalating impact of Trump-era tariffs.
- Continued divestment of equity securities, selling $4.5 billion.
- No share repurchases occurred, despite a 10% stock downturn from its peak.
- Reported a $3.8 billion accounting loss related to its stake in Kraft Heinz.
- Warren Buffett is set to step down as CEO at the end of 2025, with Greg Abel assuming the role.
Financial Performance and Macroeconomic Headwinds
Operational earnings for the Omaha-based conglomerate, which encompasses diverse sectors ranging from insurance to railways, amounted to $11.16 billion for the quarter, a decrease from the prior year. This decline was primarily attributed to a downturn in insurance underwriting, although other key divisions, including railroads, energy, manufacturing, services, and retail, demonstrated improved profitability. The company’s persistent concern over international trade policies was underscored in its quarterly report, noting an acceleration of trade tensions and tariffs in the first half of 2025. Berkshire projected “considerable uncertainty” and “reasonably possible negative consequences for most, if not all, our operations, as well as for our equity investments.”
Capital Management and Portfolio Adjustments
Despite its cautious outlook, Berkshire Hathaway maintained robust liquidity, with cash reserves totaling $344.1 billion, just shy of its late March record. Concurrently, the firm continued its divestment strategy, marking its eleventh consecutive quarter as a net seller of stocks, divesting $4.5 billion in equity securities in the first half of 2025. Notably, no share repurchases occurred during this period, a decision that surprised some analysts given Berkshire’s shares had fallen more than 10% from their historical peak. The conglomerate’s portfolio also faced specific challenges, including a $3.8 billion accounting loss tied to its stake in Kraft Heinz, identified as one of its weakest investments. This occurred amid Kraft Heinz’s consideration of a grocery unit spin-off, following the recent resignations of two Berkshire executives from its board.
Leadership Transition
This earnings report also marks the first since 94-year-old Warren Buffett announced his planned departure as CEO at the end of 2025. Greg Abel, current Vice Chairman of non-insurance operations, is set to assume the chief executive role, with Buffett transitioning to Chairman of the board.
Michael Carter holds a BA in Economics from the University of Chicago and is a CFA charterholder. With over a decade of experience at top financial publications, he specializes in equity markets, mergers & acquisitions, and macroeconomic trends, delivering clear, data-driven insights that help readers navigate complex market movements.