Corona crisis hits amazon – quarterly profit doubles

Corona crisis hits amazon - quarterly profit doubles

Amazon has continued to benefit from the internet shopping boom in the midst of the pandemic. In the second quarter, sales shot up by 40 percent to 88.9 billion dollars (75.1 billion euros) compared to the previous year’s figure, as the group announced in seattle after the close of the US stock exchange.

The profit of the world’s largest online retailer was 5.2 billion dollars, roughly double the previous year’s figure. The results were considerably higher than the analysts’ forecasts, and the share price initially reacted with strong price increases. The fact that amazon, with its delivery services, is one of the major beneficiaries of the corona crisis had already become apparent in the previous quarter. In addition, the cloud business with IT services and storage space in the network continues to flourish, even if amazon’s flagship AWS has recently not quite been able to meet the high expectations.

The web platform used by many companies increased sales by 29 percent to 10.8 billion dollars in the past quarter, but growth slowed noticeably compared to the previous quarter. However, this also corresponds to the long-term trend. In general, the cloud business also benefits in the pandemic, as increased home work, for example, causes demand to rise. For amazon, the division is very lucrative because of its high profit margins; in the most recent quarter, operating profit was 3.4 billion dollars.

Faced with a hiring drive and heavy investments to cope with the customer rush in the corona crisis, amazon’s costs also increased sharply. However, this had already been announced by CEO jeff bezos. Three months ago, he warned investors: "if you own amazon stock, you’d better sit down now, because we’re not thinking small". The group had initially been somewhat overwhelmed by the high volume of the pandemic, so 175.000 additional employees hired. Amazon now pays among the roughest employers in the U.S.

For the current third quarter, the company projected sales of between $87 billion and $93 billion, which would result in strong year-over-year growth of 24 to 33 percent. Amazon expects operating profit of 2.0 billion to 5.0 billion dollars. In the corresponding period of the previous year, the company had earned 3.2 billion dollars. This was also well received by the market: investors love the stock, which rose by over five percent at the end of the day. With a share price increase of around 65 percent since the beginning of the year, the bezos group is one of the biggest winners on the financial market anyway.