Berkshire Hathaway sees major profit drop amid wildfire losses

In Omaha, Nebraska, Warren Buffett’s company, Berkshire Hathaway, reported significant losses in the first quarter of 2025. The corporation's earnings fell to $4.6 billion, just over one-third of the previous year's profits of $12.7 billion. The decrease is attributed to a sharp decline in the value of its investments, alongside insurance losses totaling $860 million due to policies associated with the Southern California wildfires. These financial results were made public amidst a gathering of thousands of Berkshire Hathaway shareholders, eager to listen to Buffett's insights during the annual meeting on May 3, 2025. Berkshire Hathaway's income was severely impacted by an ongoing decline in investment values, reflecting the volatility of the market and its effect on overall profitability. Despite this downturn in profits, the company still reported a substantial $9.6 billion in operating earnings, which indicates a 14% decline when compared to the prior year. The breakout figures for the first quarter revealed earnings per Class A share at $3,200, significantly down from $8,825 in the same period last year. However, the operating earnings were in line with Buffett's long-standing advice for investors to focus on operational performance, which excludes volatile investment valuations. As of the end of the first quarter, Berkshire Hathaway's cash reserves have grown to $347.7 billion, signifying that Buffett has yet to identify attractive investment opportunities. This cash increase is seen as a potential red flag among analysts and investors, who are keenly waiting for indications of how and when Buffett will deploy this capital. There were hopes that the recent market drop, triggered by political factors such as President Donald Trump’s tariff announcements could provide Buffett with new opportunities to invest. Amidst the financial updates, numerous shareholders expressed their gratitude toward Warren Buffett, who at 94 years old, is a revered figure in the investment community. Some attendees, such as Haibo Liu, who came from China, emphasized their concerns over the future of these meetings, recognizing this could be one of the last opportunities to hear directly from Buffett. This sentiment added to the atmosphere as attendees gathered not just for financial information, but also to express appreciation for Buffett's impact on their investment strategies and successes.