Berkshire Hathaway's second-quarter operating earnings rose 16% year over year to $12.98 billion, but about $1.2 billion of that gain came from a currency swing on the company's foreign-denominated debt. Strip that swing out, and underlying growth was closer to 5%, with manufacturing accelerating and insurance underwriting profit falling.
Berkshire Hathaway's second-quarter operating earnings, reported Saturday, rose 16% year over year to $12.98 billion from $11.16 billion, an increase of about $1.8 billion. About $1.2 billion of that increase, however, came from a single, unusual source: the changing dollar value of Berkshire's own debt.
A currency swing does the heavy lifting
Berkshire and its finance arm owe billions in euro-, pound-, and yen-denominated senior notes — about 4.85 billion euros, 1.75 billion pounds, and 2,481 billion yen at par. Accounting rules require the company to restate what those borrowings are worth in dollars every quarter, with the change flowing through earnings.
In the second quarter of 2025, that revaluation produced an $877 million after-tax loss. This year, the same item produced a $326 million gain. The swing between those two figures, about $1.2 billion, sits inside operating earnings, in an "other" category that jumped to $1.27 billion from $32 million a year ago.
Strip the currency swing out of both periods. Operating earnings grew to about $12.7 billion from about $12.0 billion a year earlier — growth of about 5%.
Manufacturing accelerates, insurance softens
The rest of the quarter looked more ordinary. Manufacturing, service and retailing earnings rose 24% year over year to $4.5 billion, the strongest part of the report. Berkshire Hathaway Energy earned $891 million, up 27%, and BNSF railroad earnings grew 6% to $1.6 billion.
Insurance moved the other way. Underwriting profit fell 13% to $1.7 billion, and insurance investment income slipped 9% to $3.1 billion.
Not a one-quarter quirk
The first quarter carried the same kind of help. A $249 million currency gain replaced a $713 million year-ago loss, worth about $1 billion to the comparison. For the first half, operating earnings rose 17% as reported, but about 6% with the currency effect stripped from both years.
Berkshire tells stock market investors to look past its reported net earnings, because accounting rules push unrealized stock-portfolio swings through that figure. Net earnings came to $25.7 billion this quarter. Currency moves on debt are arguably the same kind of noise — driven by exchange rates rather than how the railroad or the insurers ran — yet this time they sit inside the operating number Berkshire points investors toward.
Source: Motley Fool
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