Berkshire Hathaway (BRK.A.US) reported a fourth quarter operating profit of $10.2 billion, a year-on-year decrease of nearly 30%.

Berkshire Hathaway (BRK.A.US) released its fourth quarter and full-year performance for 2025 on February 28. According to GAAP standards, net profit attributable to shareholders in 2025 was $66.968 billion, a significant decrease from $88.995 billion in 2024; fourth quarter net profit was $19.199 billion, a slight decrease from $19.694 billion in the same period of the previous year. However, the biggest "noise" in this financial report still comes from accounting fluctuations on the investment side. Berkshire reiterated in the press release that GAAP requires unrealized gains and losses on stock investments to be included in the current period's income, making single-quarter or even single-year net profit "usually meaningless" and potentially misleading to investors who do not understand accounting rules. If we look at the "operating earnings" (excluding investment income/losses and some impairments) that better reflect the business aspect, Berkshire's operating earnings for 2025 were $44.486 billion, a decrease of approximately 6% from $47.437 billion in 2024; fourth quarter operating earnings were $10.2 billion, a year-on-year decrease of about 30%, with significant declines in insurance underwriting and the "other" segment being the main drag. On the investment side, investment gains in 2025 were $30.737 billion, lower than $41.558 billion in 2024; at the same time, the company made non-temporary impairments (after-tax) of $8.255 billion (including $4.495 billion in the fourth quarter) for Kraft Heinz Company and Occidental Petroleum Corporation, becoming one of the important factors contributing to the decline in net profit. The "puzzle" of net profit: operating profit + investment income - impairments From the profit structure, the $66.968 billion in net profit attributable to shareholders in 2025 was composed of three parts: operating profit of $44.486 billion, investment income of $30.737 billion, and non-temporary impairments of -$8.255 billion (after-tax) for Kraft Heinz Company and Occidental Petroleum Corporation. In the fourth quarter, the breakdown was similar: operating profit of $10.2 billion, investment income of $13.494 billion, impairments of -$4.495 billion, resulting in net profit of $19.199 billion. This also explains why Berkshire repeatedly emphasizes not to use a single net profit indicator to evaluate operating quality: when investment income and impairments "amplify" fluctuations on the profit and loss statement, net profit often reflects more the capital market prices and one-time accounting treatments rather than the business's current business conditions.