Amazon’s first-quarter net profit more than tripled on the back of strong revenue growth as the Covid-19 pandemic boosted online shopping globally.
The Seattle-based e-commerce company’s net profit surged 224 per cent yearly to $8.1 billion in the three months ending March 31.
Revenue during the period increased 44 per cent to $108.5bn, beating analysts' average estimate of $104.4bn.
The company's stock was up by more than 3.7 per cent to $3,601 a share in after-hours trading. The share price has increased more than 40 per cent in the past year.
Amazon’s operating income surged more than 122 per cent from the prior year to $8.9bn in the first quarter.
Amazon Web Services, the company’s subsidiary providing on-demand cloud computing platforms to other businesses, saw good momentum in sales during the pandemic.
Its revenues reached $13.5bn in the first quarter, rising annually by more than 32 per cent.
“AWS has become a $54bn annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating,” said Jeff Bezos, Amazon founder and chief executive.
“Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available.
"We continue to invent relentlessly on their behalf."
In its second quarter sales guidance, Amazon expects revenues to hover in the range of $110bn to $116bn, soaring between 24 per cent and 30 per cent compared with the same period a year earlier.
Operating income is expected to be between $4.5bn and $8bn in three months to June 30, the company said.
From January to March, sales at the company’s online stores grew 44 per cent to $52.9bn. Whereas, physical store sales dropped by 16 per cent yearly to $3.9bn.
The Covid-19 pandemic has increased the trend of online shopping as users avoided 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 36 per cent to $7.5bn in the first quarter.
“As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year … and streaming hours are up more than 70 per cent year-on-year,” Mr Bezos said.
The "Other" category, which included sales from advertising, had an annual growth of 77 per cent in its revenues, to $6.9bn.
Amazon, which has more than 200 million paid Prime members worldwide, said it would spend more than $1bn on raising wages for more than half a million of its US operations workers.
The company’s chief financial officer, Brian Olsavsky, said the company aimed to increase spending on video content as consumers were watching content for more hours on Amazon.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Company%20profile
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What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
UAE currency: the story behind the money in your pockets
WITHIN%20SAND
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RESULT
Arsenal 0 Chelsea 3
Chelsea: Willian (40'), Batshuayi (42', 49')
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Results:
First Test: New Zealand 30 British & Irish Lions 15
Second Test: New Zealand 21 British & Irish Lions 24
Third Test: New Zealand 15 British & Irish Lions 15
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
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If you go
Flying
Despite the extreme distance, flying to Fairbanks is relatively simple, requiring just one transfer in Seattle, which can be reached directly from Dubai with Emirates for Dh6,800 return.
Touring
Gondwana Ecotours’ seven-day Polar Bear Adventure starts in Fairbanks in central Alaska before visiting Kaktovik and Utqiarvik on the North Slope. Polar bear viewing is highly likely in Kaktovik, with up to five two-hour boat tours included. Prices start from Dh11,500 per person, with all local flights, meals and accommodation included; gondwanaecotours.com
57%20Seconds
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The specs
Engine: 2.0-litre 4-cyl turbo
Power: 247hp at 6,500rpm
Torque: 370Nm from 1,500-3,500rpm
Transmission: 10-speed auto
Fuel consumption: 7.8L/100km
Price: from Dh94,900
On sale: now
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
