Berkshire Hathaway, the legendary investment company helmed by Warren Buffett, is going through one of its most turbulent quarters in recent memory. The company announced a 59 percent drop in net income, largely due to a nearly four billion dollar write-down in its Kraft Heinz holdings. Adding to the trouble are weakening profits from its core insurance businesses and mounting trade pressures from the United States’ evolving tariff policy.
Berkshire’s troubles come at a critical moment in its leadership transition. Since Buffett’s announcement on May 3 that he would step down as CEO by the end of the year, the company’s stock has fallen more than 12 percent. Compared to the broader S&P 500 index, Berkshire’s performance has lagged by more than 22 percentage points in the same period. Analysts believe this decline is not just a reaction to quarterly results but also a reflection of investors adjusting to life after Buffett, who transformed Berkshire from a modest textile company into a trillion-dollar conglomerate over six decades.
The latest financial results lay bare the challenges Berkshire now faces. Overall net profit dropped to 11.16 billion dollars, marking a four percent dip in the bottom line. However, the more eye-catching figure was the 3.76 billion dollar write-down on its long-standing investment in Kraft Heinz. The food company, once considered a crown jewel in Berkshire’s portfolio, has been underperforming for years. Its valuation has now fallen to just 8.4 billion dollars, down from over 17 billion dollars in 2017. Buffett had previously admitted that the 2015 Kraft-Heinz merger was overpriced, and this marks the second major write-down on that investment after a similar dip in 2019.
Beyond Kraft Heinz, Berkshire’s diversified business model also felt the sting of global trade shifts. A wide range of its consumer-focused subsidiaries, including apparel brands like Fruit of the Loom and sporting goods maker Brooks, reported weaker sales. The conglomerate confirmed that its consumer products group saw a 5.1 percent revenue decline in the second quarter, driven by lower volumes and restructuring efforts. A key contributing factor was the new tariff policy introduced by US President Donald Trump.
In April, the President imposed sweeping reciprocal tariffs covering imports from more than 180 countries. These tariffs have already come into effect for many nations, and their ripple effect is being felt across American businesses. For Berkshire, this meant order delays, shipment bottlenecks, and increased cost burdens that eroded margins. At the company’s annual meeting earlier this year, Buffett reiterated his belief in free trade and criticized tariffs as an economic blunt force that could destabilize global supply chains.
Adding to the concern is uncertainty around the future direction of Berkshire’s investment strategy. With Buffett stepping aside and Vice Chairman Greg Abel poised to take over, investors are questioning whether the company will maintain the same aggressive but calculated investment philosophy. Berkshire has not made any major acquisitions in recent quarters, leading some to believe it is becoming more risk-averse or lacks a strong pipeline of opportunities in the current economic climate.
Despite these headwinds, Berkshire continues to hold a diverse and resilient portfolio, ranging from insurance giants and railroads to renewable energy companies and consumer brands. It remains a financial powerhouse with nearly 200 businesses and more than a trillion dollars in market capitalization. Yet, the current earnings dip has reminded investors that even the most seasoned empires can face growing pains during a transition.
With earnings under pressure, market volatility high, and leadership changing hands, all eyes will be on Berkshire’s next moves. For investors, the message is clear: this is a period of recalibration for one of the world’s most admired companies.
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