Berkshire Hathaway Reports Lower Fourth-Quarter Profits
Berkshire Hathaway announced on Saturday that its operating profit for the fourth quarter saw a decline, largely due to reduced revenue from its insurance sector and the decision to write off its long-standing investment in Occidental Petroleum.
This marks Warren Buffett’s final quarter in the CEO role, with Greg Abel now taking the reins, although Buffett will continue as chairman.
As of the end of 2025, Berkshire boasted an impressive cash reserve of $373.3 billion, offering Abel the flexibility to pursue substantial acquisitions—something Buffett had largely shied away from over the last decade.
The company reported a 30% drop in fourth-quarter profits, which came in at $10.2 billion, equating to about $7,092 per Class A share, compared to $14.53 billion in the same quarter last year.
This decline was particularly influenced by a 38% fall in insurance profits. Lower interest rates affected Berkshire’s cash flow, while pricing pressures hampered Geico’s auto insurance and reinsurance segments in attracting new customers.
Net income dipped by 3% to $19.2 billion from $19.69 billion, as writedowns and reduced operating income counteracted any gains from Berkshire’s investments in major companies like Apple and American Express.
For the entire year, operating income was down 6% to $44.49 billion, and net income fell by 25% to $66.97 billion.
Buffett has consistently advised investors to overlook fluctuations in net income, stating that it reflects accounting rules around unrealized gains and losses on stock investments that haven’t been sold.
In his inaugural annual letter to shareholders, Abel honored Buffett’s profound influence, calling him an “extraordinary CEO” and perhaps the best investor ever. He emphasized a commitment to discipline in managing Berkshire’s capital investments.
Abel expressed a desire to uphold the strong legacy established by Buffett and his late partner, Charlie Munger. He noted, “I understand how you want us to be successful together and to do it the right way.”
He also mentioned that performance improvement is needed within some channels of Berkshire’s business. Abel is anticipated to take a more active approach than Buffett in supervising operations, while the various companies will still maintain their day-to-day independence.
An analyst from CFRA Research, Kathy Seifert, remarked that revenue growth poses a challenge, suggesting that gains in reinsurance and commercial insurance may stall in 2026. “Overall revenue growth was also quite slow,” she added.
Berkshire’s $4.5 billion writedown of its 26.9% stake in Occidental suggests a belief that the dip in stock price is likely to be long-lasting. Nevertheless, the company stated it has no plans to divest these shares.
Buffett had invested in Occidental in 2019 to help facilitate its acquisition of Anadarko Petroleum and has consistently praised the company’s leadership.
This writedown marks the second for Berkshire in 2025, following a $3.76 billion reduction on its investment in Kraft Heinz.
Geico reported that its pretax underwriting profit nearly halved in the fourth quarter due to increased advertising expenditures and a surge in accident claims.
Meanwhile, BNSF Railway’s profits grew by 6% in the fourth quarter, though Berkshire’s energy sector profits fell by 5%.
In contrast, profits from Berkshire’s manufacturing, retail, and services divisions rose by 3% for the quarter and 4% for the year, despite “weak” consumer demand impacting overall sales in some segments like Duracell and Fruit of the Loom.
A decline in foreign currency-related profits further stressed operating income.
Since Buffett’s resignation announcement on May 3, Berkshire has lagged behind the S&P 500 by over 27 percentage points, with both Berkshire’s stock and the index showing less than 1% growth in 2026.
