Amazon first-quarter profits dip as it warns of $4bn coronavirus costs

The etail titan said operating income dropped 9% to $4bn in the three months to March 31.

Net sales jumped 26% to $75.5bn during the same period as consumers across the globe bought more online during the pandemic. Stripping out what Amazon called the “unfavourable” impact of currency exchange rates, sales were up 27%.

Amazon boss Jeff Bezos said the business would make at least $4bn in operating profit during its second quarter “under normal circumstances”.

But he said Amazon would “spend the entirety of that $4bn, and perhaps a bit more” on a string of initiatives related to the global health emergency.

Bezos highlighted the purchasing of PPE equipment, enhanced cleaning of its warehouse facilities, higher wages for hourly-paid workers, “less-efficient” processes that allow for social distancing and investments in developing its own coronavirus testing facilities as the key areas that would drag on profitability.

Amazon said it has already purchased 100 million face masks for employees, more than 1,000 thermal cameras and 31,000 thermometers, which are being used to conduct daily temperature checks for workers across its business, including those working at Whole Foods Market stores.

The company has also established a team of research scientists, programme managers, procurement specialists and software engineers to help it build testing capacity. That team is constructing its first lab and has started a pilot to test frontline workers.

Amazon has already hired 175,000 new staff across its fulfilment and delivery network to beef up its response to increased demand.

Bezos said: “The current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced.

“The service we provide has never been more critical, and the people doing the frontline work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work. We’re not going to let them down.

“Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention and money.”

Bezos warned shareholders that would not be an easy – or cheap – journey for the business.

“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” he said.

“Under normal circumstances, in this coming Q2, we’d expect to make some $4bn or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4bn, and perhaps a bit more, on Covid-related expenses getting products to customers and keeping employees safe.

“There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and wellbeing of our hundreds of thousands of employees.”