This year things are going really well for Amazon. The online mail order company is one of the winners of the Corona pandemic.
37 percent sales increase
Corona is a real stroke of luck for Amazon. In times of quarantine and compulsory masks, people are buying even more online. In the third quarter of this year, the online mail-order company recorded a 37 percent increase in sales. Amazon’s sales have thus risen to 96.1 billion US dollars. The retailer’s operating profit doubled to 6.2 billion US dollars and the net profit even tripled to 6.3 billion US dollars. This means that the group has now also achieved operating profit outside North America. After all, there were only losses in the first half of the year. Last year, the retailer had a loss of 386 million US dollars. With an initial plus of 345 million US dollars in the second quarter, Amazon has now achieved an operating profit of 407 million dollars. The retailer’s profits in North America rose by a full 76 percent to 2.3 billion US dollars.
Operating profit remains lower than net income. This is mainly due to income from minority interests and investments. In addition, the losses of previous years continue to have a tax-reducing effect. Once the Group’s loss carryforwards have been used up, Amazon’s tax burden will then also increase. The tax incentives naturally motivate Amazon to continue making high investments. The share price is also noticeable here. If the share price rises, the trader has to adjust the cost of issuing shares, which in turn leads to higher accounting costs. The costs then also reduce the tax burden of the group again. The provisions for taxes can then be reversed and a negative tax burden arises, even if the Group still pays taxes.
Cloud division booming at Amazon
These figures do not even include Amazon Web Services (AMS), Amazon’s cloud division. The Group does not include this in its international or North American revenues. Business is also booming in the cloud division, where sales rose by 29 percent to USD 11.6 billion. Operating profit also increased to USD 3.5 billion, up 56 percent. This means that the AWS division has a higher margin than the retail sector. Even with the entire media offering, retail is a low-margin business for Amazon.
The share price has also changed. Analysts’ expectations were exceeded here. The figures for the quarter were announced on Thursday, with an increase of almost 70 percent. One share now costs 3,211 US dollars. Earnings per share are now two thirds higher. According to estimates, sales in the current quarter are expected to continue to grow between 28 and 38 percent and operating profit is expected to be between one billion and approximately 4.5 billion US dollars. This is less than in the current reported quarter. So it remains exciting to see where things will go.