(Reuters) -Warren Buffett's Berkshire Hathaway on Saturday took a $3.76 billion writedown on its stake in Kraft Heinz, an acknowledgment the decade-old investment hasn't worked out, and reported lower quarterly operating profit as insurance underwriting premiums declined.
Berkshire also reported a 59% decline in quarterly net income, reflecting the writedown as well as lower investment gains from its common stock holdings.
Second-quarter operating income fell 4% $11.16 billion, or about $7,760 per Class
A share, from $11.6 billion a year earlier. Net income fell to $12.37 billion from $30.35 billion.
Cash totaled a near-record $344.1 billion. Berkshire sold more stock than it bought for an 11th straight quarter. It also conducted no stock buybacks, and through mid-July had conducted none since May 2024.
The $3.76 billion after-tax writedown for Berkshire's 27.4% stake in Kraft Heinz, equal to $5 billion before taxes, followed the struggling food company's May announcement it would consider strategic alternatives, which could include a breakup.
Buffett's company had been carrying Kraft Heinz on its books at above-market value but said economic and other uncertainties, as well as its longer-term plans to remain an investor, made the gap "other-than-temporary," necessitating a writedown.
The writedown is Berkshire's second for Kraft Heinz, following a $3 billion writedown in 2019. Buffett acknowledged at the time that Berkshire overpaid in the 2015 merger creating the food company.
Shares of Berkshire have fallen more than 12%, and lagged the Standard & Poor's 500 by about 22 percentage points, since Buffett announced on May 3 he would step down as chief executive at the end of the year, with Vice Chairman Greg Abel replacing him.
(Reporting by Jonathan Stempel in New York; Editing by Susan Fenton)
