No. of Recommendations: 39
My summary of 2Q report ;-)
Berkshire Hathaway-BRKB reported the company’s net worth during the first half of 2025 increased 3%, or a substantial $18.6 billion, to $668 billion with book value equal to about $464,454 per Class A share as of 6/30/25. Berkshire boasts the largest shareholders’ equity of any U.S. company.
Net Earnings and Investment Gains
On a GAAP basis, Berkshire reported net earnings of $12.4 billion during the second quarter, a significant 59% decline from $30.3 billion in the prior year quarter. Investment gains and losses from changes in the market prices of Berkshire’s substantial equity investments will produce significant volatility in earnings. Berkshire's five major equity holdings represent 67% of total equity holdings and include American Express, whose stock price charged 18% higher during the quarter; Apple, whose stock was sliced 8% lower; Bank of America, whose stock deposited a 13% gain during the quarter; Coca-Cola, whose stock fizzled 1% lower; and Chevron, whose stock slid 14% during the quarter. Overall, during the second quarter, Berkshire’s investments gained $5 billion compared to $18.8 billion in the prior year period.
Berkshire also incurred an impairment charge of $3.8 billion during the quarter related to its investment in Kraft Heinz, which is exploring strategic moves including a plan to break itself up.
Revenues and Operating Earnings
During the second quarter of 2025, Berkshire’s revenues dipped 1% to $92.5 billion as operating earnings declined 4% to $11.2 billion primarily due to a decline in insurance underwriting and an $877 million foreign currency exchange loss. Excluding the foreign currency swings, operating earnings actually increased 8% to $12.0 billion. Berkshire noted its operating results may be affected in future periods by the impacts of ongoing macroeconomic and geopolitical events, including international trade policies and tariffs which have accelerated in 2025. Considerable uncertainty remains as to the ultimate outcome of these events.
Insurance
During the second quarter, Berkshire’s insurance underwriting earnings declined 12% to a still solid $2.0 billion as continued improvement at GEICO was offset by declines in the Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group related to higher losses and underwriting expenses. Insurance investment income increased a modest 1% during the quarter to $3.4 billion, due to slightly higher dividend income, slightly lower interest income and a lower tax rate. The float of the insurance operations rose 1.8%, or $3 billion, during the first half to approximately $174 billion. Thanks to insurance underwriting gains in 2025, the cost of this float was negative.
Railroad (BNSF)
Burlington Northern Santa Fe’s revenues remained relatively unchanged during the second quarter at $5.7 billion as a 1.4% increase in car/unit volume was offset by a 1.4% decline in average revenue per car/unit due to lower fuel surcharges and business mix changes. Volume growth during the quarter was led by 14% growth in coal due to the competitive effects of higher natural gas prices. Net earnings chugged 19.5% higher to $1.5 billion during the quarter due to overall improved operating efficiencies and productivity and from lower effective income tax rates. After Union Pacific recently announced plans to acquire Norfolk Southern, monopoly players are speculating on whether BNSF may make a bid for CSX as the railroads further consolidate in the U.S.
Energy (BHE)
Berkshire Hathaway Energy reported revenues dipped 1% during the quarter to $6.4 billion with net earnings rising 7% to $702 million, reflecting primarily higher earnings from U.S. utilities due in part to higher retail customer rates and higher customer usage. On the litigation front, cumulative wildfire loss estimates by PacifiCorp were approximately $2.75 billion through June 30, 2025, of which $1.37 billion have been paid with estimated unpaid liabilities for the wildfires of approximately $1.38 billion. The final real estate litigation settlement includes scheduled payments over the next four years aggregating $250 million with $67 million in payments made through June 30, 2025.
Manufacturing
Berkshire’s Manufacturing businesses reported revenues increased 1% to $20 billion for the second quarter with operating earnings up 4% to $3.2 billion.
The Industrial Products segment generated a 3% increase in revenues to $9.5 billion with operating earnings jumping 10% to $1.8 billion thanks to improvements at Precision Castparts amid the higher demand for aerospace products.
The Building Products segment revenues increased 1% to $6.9 billion, but operating earnings decreased 4% to $1.0 billion due to slowing customer demand and pricing pressures in the housing market.
The Consumer Products segment revenues declined 5% to $3.5 billion with operating earnings dipping 1% to $377 million during the quarter. Most of the consumer businesses experienced declines in revenues related to lower volumes amid uncertainties arising from international trade policies and tariffs, which produced delays in orders and shipments in the second quarter. Brooks Sports was the exception as revenues raced 18.4% higher during the quarter thanks to increased unit sales and changes in business mix.
Service and Retailing
Service and Retailing revenues decreased 6% during the quarter to $33.4 billion with pre-tax earnings increasing 7% to $1.4 billion.
The Service group revenues rose 9% to $5.7 billion primarily attributable to higher revenues from aviation services thanks to increased usage at NetJets; Integrated Project Services due to increased construction and consulting services; and due to higher customer demand at TTI, a distributor of electronic components. Pre-tax earnings in the Services group flew 15% higher to $729 million during the quarter, primarily attributable to increases from aviation services, TTI, the leasing businesses and Charter Brokerage.
McLane’s revenues increased 1% during the quarter to $12.6 billion with pre-tax earnings delivering a tasty 24% gain to $176 million due to a higher overall gross sales margin rate.
The Retailing group revenues increased 6% to $5.0 billion during the quarter with pre-tax earnings motoring 12% higher to $376 million. Berkshire Hathaway Automotive (BHA) accounts for 70% of the retailing group’s total revenue. BHA’s 7% increase in revenues reflected higher new and pre-owned vehicle sales as many folks purchased cars during the quarter ahead of the tariffs. Revenues of the other retailers increased 3% during the quarter. Several of the retailers experienced sluggish customer demand due to increased competition and the impacts of higher economic uncertainty and changes in customer confidence. BHA’s pre-tax earnings increased 8.0% during the quarter attributable to earnings increases from parts/service/repairs and finance operations. Aggregate operating earnings for the remainder of Berkshire’s retailers increased 24%, or $20 million, primarily due to higher earnings from Nebraska Furniture Mart and seasonality effects at See’s Candies.
During the second quarter, Pilot Travel Centers’ revenues traveled 22% lower to $10.1 billion due to significantly lower volumes from bulk fuel sales and fuel trading activities, as well as lower average fuel prices. Pre-tax earnings nosedived 40% lower to $119 million reflecting lower gross sales margins and higher operating expenses.
Financial Position
Berkshire’s balance sheet continues to reflect significant liquidity and a very strong capital base of $668 billion as of 6/30/25. Excluding railroad, energy and utility investments, Berkshire ended the quarter with $648.1 billion in investments allocated approximately 41.3% to equities ($267.9 billion), 2.3% to fixed-income investments ($15.1 billion), 52.4% in cash and short-term investments ($339.8 billion) and 3.9% in equity method investments ($25.3 billion), which includes 27.4% ownership of Kraft Heinz and 28.1% ownership of Occidental Petroleum.
Free Cash Flow
Free cash flow dropped 22% during the first half to $11.8 billion primarily due to the lower earnings. During the first half, Berkshire sold $11.6 billion in stocks including those in the banks, insurance and finance sector, including Citigroup, Capital One and part of Bank of America. Berkshire realized $4.2 billion in gains from the sale of investments in the second quarter, which may have included a further trimming of Bank of America stock. Berkshire also purchased $7.1 billion of equity securities during the first half in the consumer products sector and the commercial, industrial and other sectors…which likely includes Berkshire’s undisclosed “mystery” stock investment which may be revealed in the next 13-F filing in mid-August. Berkshire also sold a net $37.2 billion of U.S. Treasury Bills and fixed-income investments during the first half of the year. During the first half, capital expenditures increased 2% to $9.1 billion, which included $6.2 billion for BNSF and BHE, its railroad and utility and energy units. Berkshire expects capital expenditures over the remainder of 2025 for BNSF and BHE to approximate $8.8 billion.
Share Repurchases
Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett. There were no repurchases in the first half of 2025 consistent with Buffett's disciplined approach to valuation.
