new York The discount campaigns in the important Christmas business brought Amazon a surprisingly high turnover in the past quarter. The largest US online retailer made $149.2 billion in the fourth quarter, while analysts had expected $145.42 billion. The net profit, on the other hand, was only a fraction of market expectations at 300 million. Investors are also worried about the forecast for the current quarter. The share price fell by more than four percent in after-hours trading.
Amazon’s results had been eagerly awaited. After all, the Seattle group had recently disappointed investors’ expectations several times. The market value had more than halved from the record highs during the pandemic at the turn of the year, when the share price slipped below $84. Since then, the paper has increased by a third again, but many concerns remain.
“2022 was a difficult year for Amazon,” commented Julian Skelly from the consulting firm Publicis Sapient on the quarterly results. The core business of e-commerce is feeling the increasing economic headwinds, such as the fact that people are shopping in physical stores again and have less purchasing power.
Amazon is not only suffering from high inflation and the weakening economy worldwide like many companies. The online retailer is also sitting on homegrown problems. During the corona pandemic, Amazon invested too aggressively in new warehouses and logistics centers, some of which are currently empty. In recent weeks, the company has also laid off 18,000 employees because of the economic situation.
For a long time, the cloud subsidiary AWS was able to compensate for the losses in classic online trading on several occasions. Recently, however, the lucrative business of AWS had also stumbled. Companies have less money to spend on cloud services overall, and many are also renegotiating their old contracts.
“AWS will not always be able to absorb losses”
“Recently, the slowdown at AWS has been even worse than expected, and that means Amazon won’t be able to rely as much on operating profits from this area in the coming quarters,” warns analyst Andrew Lipsman of market research firm Insider Intelligence. The few bright spots currently – better cost control, good subscription figures and services for external sellers – are not enough to compensate for the weaknesses in the important growth and profit drivers. 2023 could therefore be “even bumpier”.
“Even though Amazon has eased the hurdle on its anemic fourth-quarter guidance, it’s hard to see this as anything other than a disappointing holiday quarter,” the analyst wrote. Online retail in particular has slowed, dragging down the advertising business, which has been a big bright spot in recent quarters, Lipsman notes.
Amazon made a net profit of just $278 million in the fourth quarter. Operationally, the North American business lost $240 million in the fourth quarter and the international business even lost $2.2 billion. This could only be compensated by the operating profit of AWS, which generated almost as much as in the previous year with significantly increased sales of 5.2 billion dollars. The bottom line for the year as a whole is a loss of 2.7 billion dollars.
Amazon was able to increase sales in North American online retail by more than a tenth to 93 billion in the fourth quarter, while internationally it slumped by seven percent.
For the current quarter, Amazon is targeting total sales of between $121 and $126 billion. The mean is below the average analyst forecast of $125.11 billion. Operating profit is expected to be between zero and four billion dollars.
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