Berkshire Hathaway faced a tough first quarter in 2025. Its operating profit dropped 14% from last year, going down to $9.64 billion from $11.22 billion. The company, led by Warren Buffett, said the decline was mostly due to major insurance losses from wildfires in California, bad currency changes, and ongoing global uncertainties.
The insurance-underwriting segment, which plays a big role in Berkshire’s earnings, nearly halved its profits to $1.34 billion, down from $2.6 billion a year earlier. The company pointed out that $1.1 billion in claims from wildfires in the Los Angeles area significantly affected this decline.
However, Berkshire’s income from insurance investments rose to $2.89 billion, up from $2.6 billion last year, thanks to higher interest rates on its large cash reserves.
Net income fell even more sharply, down 64% to $4.6 billion from $12.7 billion a year ago. This steep drop was mainly due to unrealized investment losses in Berkshire’s stock portfolio, which includes big names like Apple, American Express, Bank of America, Chevron, and Coca-Cola.
The company reported after-tax investment losses of $5.04 billion, compared to a $1.48 billion gain in the same quarter last year.
Currency shifts also hurt results, with Berkshire recording a $713 million foreign exchange loss, reversing a $597 million gain from last year. The U.S. dollar’s drop, especially against the Japanese yen, contributed to this loss.
Despite these challenges, Berkshire’s cash reached a record high of $347.7 billion, increasing from $334.2 billion at the end of 2024. The company has maintained a cautious approach, avoiding major acquisitions or share buybacks for the third straight quarter and remaining a net seller of stocks.
Berkshire’s various businesses had mixed results. BNSF Railway reported a 6% profit increase, boosted by higher shipments of consumer goods and cars ahead of new tariffs. Berkshire Hathaway Energy saw a strong 53% profit jump, while its manufacturing, service, and retail sectors experienced a slight 1% decline due to softer demand and more competition.
Looking forward, Berkshire Hathaway warned of ongoing uncertainty. The company pointed out that tariffs, changing trade rules, and broader geopolitical risks could unpredictably affect its businesses. They said it is difficult to forecast how these factors will impact product costs, supply chain efficiency, or customer demand.
As Berkshire Hathaway deals with these challenges, investors will be watching closely to see how management plans to use its record cash reserves while maintaining resilience across its many operations.