Amazon net profit doubles on strong online shopping

Washington-based company's net profit surged to $7.8bn

Amazon's sales increased 27 per cent to $113.1 billion in the second quarter. AP

Amazon’s second-quarter net profit surged almost 50 per cent year-on-year, underpinned by online shopping growth in the wake of the coronavirus pandemic.

The Seattle-based e-commerce company’s net profit soared to $7.8 billion, almost $2.6bn more than the same period last year, though this was 3.7 per cent, or about $300 million, less on a quarterly basis.

Revenue during the period increased 27 per cent to $113.1bn, missing analysts' average estimate of $115.2bn. This was the third consecutive quarter with more than $100bn in sales.

Amazon’s operating income increased more than 32 per cent from the prior year to $7.7bn in the second quarter.

“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food and other products that helped communities around the world cope with the difficult circumstances of the pandemic,” said Andy Jassy, Amazon’s chief executive.

The company's stock was down by more than 6 per cent to $3,352 a share in after-hours trading on Thursday. The share price has increased about 18 per cent in the past year. ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Amazon Web Services (AWS), the company’s subsidiary that provides on-demand cloud computing platforms to other businesses, saw good momentum in sales “with new commitments and migrations from customers across many major industries”.

Its revenue reached $14.8bn in the second quarter, rising annually by more than 37 per cent.

“AWS has helped so many businesses and governments maintain business continuity and we have seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud,” said Mr Jassy.

In its third-quarter sales guidance, Amazon expects revenue to hover in the range of $106bn to $112bn, jumping between 10 per cent and 16 per cent compared with the same period a year earlier.

Operating income is expected to be between $2.5bn and $6bn in the three months to September 30, the company said.

Amazon also announced 14 new renewable energy projects in Canada, Finland, Spain and the US in the second quarter. The new projects bring Amazon’s total renewable energy investments to date to 10 gigawatts of electricity production capacity — enough to power 2.5 million US homes.

It has also reached 65 per cent renewable energy across its overall business, up from 42 per cent in 2019 — putting the company on a path to power 100 per cent of its activities with renewable energy by 2025, five years ahead of its 2030 target.

From April to June, sales at the company’s online stores grew 16 per cent to $53.2bn, while physical store sales surged by 11 per cent yearly to $4.2bn.

The Covid-19 pandemic has increased the trend of online shopping as users avoid using cash to stem the spread of virus.

E-commerce will account for more than half of the total growth for the global retail sector, or $1.4 trillion, in the next five years, Euromonitor International says.

Amazon’s subscription services sales rose almost 32 per cent to $7.9bn in the second quarter.

The “Other” category, which included sales from advertising, had an annual revenue growth of 87 per cent, to $7.9bn.