Despite the lack of manpower, Amazon doubles its profit at the end of the year

Rising labor costs and supply chain issues failed to deter Amazon, which exceeded investor expectations during the pivotal holiday season.

The e-commerce giant posted revenue of $137.4 billion ($119.86 billion), in line with its fourth-quarter forecasts, and doubled its net profit to $14.3 billion ($12.47 billion), it appears. from a press release published Thursday. † Net profit has largely benefited from a return on investment, thanks to participations in the car manufacturer Rivian, which went public in November.

But the market wasn’t picky: Amazon’s share rose 14% in e-commerce following the close of the New York Stock Exchange, after a day of sharp decline.

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One of the big winners of the Covid-19 pandemic

The group said it had its “best shopping weekend” for the sales period that runs from Black Friday to Cyber ​​Monday (the Friday and Monday after the US holiday of Thanksgiving).

“Amazon has managed to exceed expectations in both sales and earnings, despite a generally less buoyant holiday season for e-commerce in general,” said Andrew Lipsman, an analyst at eMarketer. “And the continued acceleration of AWS (the cloud arm) helped amplify profits that would have shrunk without the boost the investment in Rivian delivered.”

The Seattle group is one of the major winners of the pandemic. In fact, the health restrictions associated with the Covid-19 epidemic have left consumers reluctant to massively adopt e-commerce, starting with Amazon and its promises of ultra-fast delivery and cloud-based services. Amazon is the world leader.

On this point: Alec MacGillis: “Amazon has won the Covid-19 crisis”

And the habits adopted in 2020 seem to last. For all of 2021, Amazon earned nearly $470 billion in revenue (EUR 410 billion, +21%) and more than $33 billion in net profit (EUR 28.8 billion, +57%).

Difficulties in the supply chain

But like many brands, the company has become mired in supply chain problems, high inflation and difficulties in hiring.

In the fourth quarter, operating profit, an important indicator of profitability, was 3.5 billion dollars (3 billion euros), half less than a year ago. The lack of manpower cost the group $4 billion (3.5 billion euros) during this period, the boss, Andy Jassy, ​​noted during the conference with analysts.

And the Omicron variant weighs on the warehouse capacity: “Many people are on sick leave, replacements are needed. […] In some cases we pay double or triple for the same hour worked,” he explains. But he assured that these costs would be lower in the coming months and that he planned to improve the efficiency and pace of operations to “deliver faster than before the pandemic”.

Amazon now employs more than 1.6 million people worldwide. The company said the starting wage for warehouse and logistics center workers is now more than $18 an hour in the United States. An argument she will not fail to make with efforts to unite in Staten Island, New York, as well as Bessemer, Alabama. If successful, it would be the first union in an Amazon warehouse in the United States.

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A dangerous competition

This month, Amazon plans to increase the price of the Prime subscription in the United States (to $15 or $13 per month), the premium delivery offering that also includes a video streaming platform. The company expects sales for the current quarter between 112 and 117 billion dollars (97.7 and 102 billion euros), which represents a growth of 3 to 8% over one year.

She can rely on the cloud. In the fourth quarter, its remote computing service notably signed contracts with the Nasdaq and also with Meta for its Facebook, Instagram and WhatsApp networks and messaging services. AWS generated a total of 17.78 billion dollars (15.5 billion euros) over the period, 40% more than last year.

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“Companies now spend twice as much on external computing services as they do on their own data centers,” noted Synergy Research Group analyst John Dinsdale.

Amazon will have to defend its market share, which is currently more than 32%, according to this company. The number 1 in the sector is closely followed by Microsoft, now with 21%, followed by Google, which flirts with 10%. “Microsoft’s growth is very impressive. The group has doubled its market share in 4.5 years,” emphasizes the analyst.

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