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In their Q1 2025 Earnings Release, Berkshire Hathaway (BRK-B) reported a sharp year-over-year decline in Q1 2025 net earnings, falling to $4.60 billion from $12.70 billion in Q1 2024. This decline was driven primarily by a $5.0 billion investment loss, compared to a $1.5 billion gain in the prior-year quarter. As usual, the headline number masks the company’s more stable operating performance, which Warren Buffett often emphasizes as a better measure of ongoing business health.

Operating earnings, which exclude volatile investment gains or losses, came in at $9.64 billion, down modestly from $11.22 billion in Q1 2024. Segment-level performance was mixed. Insurance underwriting income dropped to $1.34 billion from $2.60 billion, reflecting a tougher environment for some of Berkshire’s insurance businesses. However, insurance investment income rose to $2.89 billion, up from $2.60 billion, aided by higher yields on cash and fixed-income instruments.

BNSF Railway showed resilience, posting a slight earnings increase to $1.21 billion, while Berkshire Hathaway Energy (BHE) delivered a substantial jump to $1.10 billion, up from $717 million last year—suggesting strong performance in utilities despite broader macroeconomic pressures.

The manufacturing, service, and retailing group, a significant part of Berkshire’s diversified portfolio, was largely flat at $3.06 billion. The “Other” segment saw a steep drop from $1.08 billion to just $41 million, due largely to foreign currency exchange losses of $713 million compared to a gain last year. Offsetting some of that drag was a surge in interest income—$869 million versus $303 million in Q1 2024—likely reflecting higher Treasury yields on Berkshire’s massive cash pile.

It’s important to reiterate that Berkshire’s GAAP-reported net income includes unrealized gains and losses from equity holdings, as required by accounting rules. These mark-to-market swings can distort true business performance. The company disclosed that Q1 2025 investment losses included $7.4 billion in unrealized losses—figures that Buffett himself warns investors not to overly focus on.

Book value and float remain strong. Insurance float rose to $173 billion, up $2 billion since year-end 2024, reinforcing Berkshire’s capital strength.

In short, while net earnings fell steeply due to market-driven losses, underlying operations remain solid, with particular strength in energy and rail. Berkshire’s balance sheet and diversified earnings base continue to provide resilience through market volatility—true to Buffett’s long-term investing philosophy.

You can find the entire earnings release here.

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