Amazon profits soar but sales growth slows

Amazon reported its third record profit in a row on Thursday, but forecasts lower-than-expected sales for the first quarter of 2019.

In the last quarter of 2018, which includes the important Christmas trading period, profits rose 63 percent to 3 billion US dollars (2.3 billion pounds) - up from 1.86 billion US dollars (1.42 billion pounds). Revenue grew 20 percent to 72.38 billion US dollars (55.42 billion pounds).

While these figures were higher than analysts had expected, it was the lowest sales growth that the online giant had recorded since the start of 2015. Amazon expects sales in the first three months of 2019 to grow between 10 percent and 18 percent, slightly below analysts' forecasts. Shares in the company fell by almost 5 percent in after-hours trading.

Sales at Amazon Web Services - the company’s cloud services platform - rose to 7.43 billion US dollars (5.69 billion pounds) from 5.11 billion US dollars (3.91 billion pounds) a year ago, reinforcing its lead over Google and Microsoft. This segment makes up about 10 percent of the company’s total revenue.

Amazon reports strong profits from holiday season

Amazon’s smart speaker, Alexa, played a key role in the company’s results, according to Amazon founder and CEO Jeff Bezos. “Alexa was very busy during her holiday season. Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year,” he said.

“The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear.”

Commenting on the results in a statement, Neil Saunders, managing director at GlobalData Retail, said: “Overall, Amazon has ended its fiscal year on a positive note. However, there is now a clear divergence in performance between the top and bottom lines – with the latter accelerating and the former decelerating.

“While the profit lines look rosy, the sales line presents a mixed bag. The slowdown in product growth is now tangible and although an 8.2 percent uplift is strong compared to many retailers, by Amazon’s standards it is a weak performance.

“On a divisional basis, North America held up better than international markets, largely thanks to the confidence of the American consumer. Even so, sales growth in North America has also dipped.”

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