Amazon was out with its Q4 and full year 2021 earnings report last week. Here are the Highlights.
Supply Chain Digest Says...
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| Amazon is hardly projecting a rebound in this quarter. Operating income is expected to be between $3.0 billion and $6.0 billion in Q1, compared with $8.9 billion in first quarter 2021. |
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Profits were strong in Q4, at $14.3 billion, up from $7.2 billion a year ago. The financial results were a surprise to some analysts who expected earnings to be more subdued as Amazon dealt with rising costs for labor and other expense categories.
Revenue in the quarter rose to $137.4 billion, up from $125.6 billion in the same period a year ago. But that’s a rise of only 9.4%, well below the 20+ percent growth the company saw just about every quarter not that long ago.
Has the well-known law of large number at last finally hit Amazon too?
For all of 2021, Amazon had $469 billion in revenue, as it keeps closing in on number 1 Walmart.
Even the big profit number is deceiving. Amazon somehow a booked a profit of nearly $12 billion in the quarter from its investment in electric-vehicle maker Rivian Automotive - accounting for almost all of its earnings for the quarter. In other words, rising costs did whack Amazon’s bottom line, which still looked strong due to the boost from the Rivian investment.
Amazon executives had previously said that the company would spend about $4 billion more in the fourth quarter than initially expected as a result of higher freight and shipping costs, labor shortages and global supply-chain challenges.
Amazon actually lost money in its core ecommerce business, saying it had $206 million in operating losses in the US and $1.63 billion in losses internationally. So Amazon is still not making money in ecommerce.
And Amazon also reported that its online stores segment actually saw a revenue decline of 1% in the quarter.
In more negative news, total operating cash flow decreased 30% to $46.3 billion for the trailing twelve months, compared with $66.1 billion for the trailing twelve months ended December 31, 2020.
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 Worse, Over the past 12 months, Amazon's free cash flow was negative-$9 billion.
Finally, worldwide shipping costs rose to $23.6 billion, an increase of 10%, in period as noted above saw on-line sales revenue actually decline 1%. That will certainly deliver a hit to operating margins.
And Amazon is hardly projecting a rebound in this quarter. Operating income is expected to be between $3.0 billion and $6.0 billion in Q1, compared with $8.9 billion in first quarter 2021.
Nonetheless Amazon’s share price jumped more than 13% Friday on the headline profit news.
In fact, it was the largest increase in any company’s market capitalizing in a single day ever, with Amazon’s value jumping $190 billion.
SCDigest is thinking investors should have looked at the details a bit more closely.
Any reaction to Amazon's Q4 numbers? Let us know your thoughts at the Feedback section below.
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