Amazon warns of profit dip in first quarter of 2017

Amazon warns of profit dip in first quarter of 2017

Amazon has warned its profits will dip in the first quarter of 2017, despite achieving growth in the last fourth quarter and for the full year of 2016.

Operating income for the first quarter of 2017 is expected to be between $250m (£200.3m) and $900m (£721.2m), compared to $1.1bn (£0.8bn) in the first quarter of 2016.

The company is currently in the middle of an expansion and is planning on creating 100,000 new, full-time jobs in the US alone over the next 18 months.

Martin Garner, an analyst at CCS Insight, told the BBC: "Amazon is in the middle of a huge expansion of its logistics and infrastructure, which started in mid-2016 and will carry on through much of 2017."

It has also increased its warehouse space by 40% and invested heavily in the Indian market, he added.

For the fourth quarter 2016, Amazon posted a 22% increase in net sales to $43.7bn (£35bn) and a rise in operating income of 13% to $1.3bn (£1bn). However, according to the New York Times, revenues fell short of the $44.7bn (£35.8bn) average revenue estimate of analysts and shares fell 4% in after-hours trading.

For the full year, net sales were up 27% to $136bn (£109bn), whilst operating income totalled $4.2bn (£3.4bn), compared to $2.2bn (£1.8bn) the year before.

The international division, which includes the UK, saw sales grow 55% to $11.8m (£9.5bn) in the fourth quarter. For the full year, sales were up 24% to $44m (£35.3bn).

Highlights of the year included expanding Prime Video to more than 200 countries, including India, and releasing Amazon Music Unlimited to Austria, Germany and the UK, Amazon said.

In the UK, grocery and fashion were the “focus areas” for the company over the past year, with the launch of AmazonFresh and growth of Amazon Fashion.

The company also extended its Prime Now service to more than 30% of the UK population and the number of items available for one-hour delivery in London increased to more than 10,000 products from Morrisons and other retailers.

Amazon UK said it now employs over 15,500 people across the UK in permanent roles at our Head Office, Fulfilment Centres, Fashion Photography Studio, three Research & Development Centres in Cambridge, Edinburgh and London and in Amazon Web Services.

Amazon does not break out turnover and profit figures for the UK.