(Reuters) – Warren Buffett's Berkshire Hathaway Inc. said on Saturday that disruptions in the global supply chain kept its cap on its ability to generate profits, while rising stock prices forced it to sell some shares and increase its cash reserves to a record.  Operating profit increased by 18% but missed analyst forecasts, as a recovery in COVID-19 cases driven by the Delta variant of the coronavirus caused shortages and reduced consumer spending, while hurricane Ida damage and floods in Europe increased insurance losses on Geico car insurance and
Net income fell by 66% over the period, reflecting lower gains from shareholdings such as Apple Inc. and Bank of America Corp.
Berkshire repurchased $ 7.6 billion of its own shares in the third quarter and $ 20.2 billion this year, as rising stock markets made buying entire companies increasingly expensive. [1
, said Cathy Seifert, a CFRA Research analyst with a "hold" rating in Berkshire. "I think we just saw it: it bought back $ 20 billion of its own shares."
Berkshire has also been a net seller of shares, selling about $ 2 billion more shares than it bought during the quarter. It ended September with $ 149.2 billion in cash and the like.
"I really hope there will be more repurchases, because there is not much evidence that capital is put into work," said Jim Shanahan, an analyst at Edward Jones & Co. Berkshire a "buy".
Operating profit for the third quarter rose to $ 6.47 billion, or about $ 4,331 per share, from $ 5.48 billion, or about $ 3,488 per share, a year earlier.
Analysts forecast an average of $ 4,493 per share. per share, according to Refinitiv I / B / E / S.
Net profit fell to USD 10.3 billion, or USD 6,882 per A share, from USD 30.1 billion. Mr. Buffett believes that the huge quarterly fluctuations in net income are usually meaningless and are due to accounting rules that he does not control.
Berkshire said supply chain disruptions had raised material and shipping prices, forcing companies such as Clayton Home's RVs and Acme bricks to raise prices – and caused a shortage of truck drivers at McLane's grocery distribution.
The disruption was also said to reduce sales of new vehicles significantly at its car dealerships and increased the cost of its consumer products, although profits are rising from Forest River RVs, Brooks running shoes and Duracell batteries.
Partly due to Delta and the disruptions, some caused by labor shortages, U.S. gross domestic product increased at a 2% annual rate during the third quarter, according to the Government's advance estimate, a decrease from 6.7% during the second quarter.
“Supply Chain creates chokepoints that will inevitably affect the loads on Berkshire's railways, creating shortcomings in their housing companies, "said Tom Russo, a partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, who has owned shares in Berkshire since 1982.
The results reflected what analyst Shanahan called an "extraordinarily high" $ 2.2 billion in catastrophic losses, mainly from Ida and floods, although other insurance companies also suffered heavy losses.
Geico alone lost $ 289 million before tax from the insurance guarantee, damaged by Ida and an increase in the number of vehicle crashes.
However, BNSF managed to increase profits by 14% to $ 1.54 billion, after as higher volumes of industrial goods and coal compensated for lower grain exports.
Mr. Buffett's failure to buy more stocks and companies has disappointed some investors and analysts.
CFRA Research analyst Ms Seifert said that Berkshire will not be sidelined forever and that in 2022 attention may be drawn to acquisitions in sectors that have long benefited, including industrial and consumer goods.
"Given the number of high-profile misses, such as Precision Castparts and Kraft Heinz, one can understand some of Berkshire's restraint," she said, referring to the aircraft parts manufacturer and the food company.