Berkshire Hathaway Takes $3.8 Billion Hit on Kraft Heinz Investment Amid Break-Up Talks

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: FT montage; Getty Images

Berkshire Hathaway has recorded a $3.8 billion writedown on its long-standing investment in Kraft Heinz, signaling fresh trouble for Warren Buffett’s 2015 megadeal in the consumer goods sector.

The impairment, disclosed in Berkshire’s second-quarter earnings, marks the second time the conglomerate has written down its stake in the food giant, following a $3 billion charge in 2019. Kraft Heinz the company behind household names like Heinz Ketchup and Kraft Macaroni & Cheese is reportedly exploring a break-up as part of an effort to revive shareholder value.

Buffett’s Berkshire had originally partnered with private equity firm 3G Capital to merge Heinz and Kraft. Since then, the company has consistently underperformed relative to the broader market, with its stock price failing to recover to previous highs.

In the quarterly filing, Berkshire explained that it considered several factors in making the impairment decision, including Kraft Heinz’s declining share value, operating performance, and its own intentions regarding the holding. As a result, it reduced the carrying value of its 27.4% stake in the company from $13.5 billion to $8.4 billion.

The writedown contributed to a sharp decline in Berkshire’s total net income, which dropped to $12.4 billion in Q2 from $30.4 billion a year earlier. Despite the setback, operating earnings Buffett’s preferred metric declined by a more modest 3.8%, landing at $11.2 billion, better than Wall Street's expectations.

Berkshire also reported that it sold $3 billion more in stocks than it purchased in the quarter, continuing a trend of net divestment for the 11th consecutive period. This suggests that Buffett and his team saw limited value in the current market, despite record highs in the S&P 500 index.

The conglomerate’s cash and Treasury holdings stood at $344 billion at the end of the quarter, a decrease of $3.6 billion from Q1, primarily due to previously leveraged Treasury investments. Without that factor, cash reserves increased by nearly $11 billion.

For the fourth straight quarter, Berkshire refrained from repurchasing its own shares, indicating a conservative stance amid volatile markets.

Meanwhile, performance varied across Berkshire's many subsidiaries. Earnings from its core insurance division dropped 12%, driven by weakness at commercial insurer Guard, which has been exiting underperforming business lines. Revenue at railroad unit BNSF grew marginally, buoyed by increased coal shipments that offset declining freight volumes in other sectors.

Looking ahead, investors are closely watching the leadership transition at Berkshire. Vice Chair Greg Abel is set to succeed Buffett as CEO on January 1, 2026. Since the announcement in May, Berkshire’s Class A shares have fallen 12%, underperforming the S&P 500’s 10% gain over the same period.

As Kraft Heinz evaluates restructuring options, the writedown underscores the ongoing challenges facing Buffett’s investment philosophy in an evolving market landscape.