Amazon set to spend $4 billion on coronavirus response, CEO says

Amazon set to spend $4 billion on coronavirus response, CEO says

Amazon is set to spend US$4 billion [AU$6.2 billion] in profit, or more, to the company’s coronavirus response, its SEO says.

Amazon founder and CEO Jeff Bezos said in its first-quarter earnings report that Amazon’s $4 billion in spending will be prioritized on efforts to keep its services to customers while keeping employees safe.

According to earlier reports, Amazon.com Inc. was able to record $75 billion in sales in the first quarter of 2020.

Amazon’s immediate financial priorities

“Our top concern is ensuring the health and safety of our employees and contractors around the world,” said Bezos.

In its report, Bezos shared that Amazon has purchased over 100 million face masks, 1,000 thermal cameras, and 31,000 thermometers in order to ensure that its associates, drivers, and support staff are safe.

Amazon set to spend $4 billion on coronavirus response

Amazon has also built a team dedicated to ramping up the company’s COVID-19 testing capacity. This team is composed of Amazon’s research and development manpower.

Amazon already has its first lab and has launched pilot testing for some of its frontline employees.

Amazon continued to hire more people to provide jobs amid the pandemic. According to the report, they provided jobs to 175,000 people in March and April. Amazon said that they are still hiring more.

Another employee-based benefit included in the report is Amazon’s hourly wage increase for those in the U.S., Canada, U.K., and other European countries. They also doubled overtime pay.

The report estimates that Amazon has “nearly $700 million” spent on its employees and partners.

Bezos said:

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

Bezos also reported Amazon’s relief efforts to communities in many parts of the world. Included in the report are the details of Amazon’s partnered organizations to provide food banks, devices, small business relief, and many others.

Where is Amazon headed financially?

As detailed in the report, Amazon is expecting sales growth within the range of 18% and 28%. However, as was mentioned, they are also assuming that they will be spending approximately $4 billion to cover COVID-19-related costs.

Amazon set to spend $4 billion on coronavirus response

Bezos said:

“There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented shareowners will understand and embrace our approach, and that in fact they would expect no less.”

While Amazon’s $4 billion spending for COVID-19 related expenses does not seem to promise immediate returns, Bezos is confident that this is the best and most appropriate financial decision for the company during the pandemic.

Images courtesy of Mathieu Thouvenin/Flickr, Anna Shvetz/Pexels, raymondclarkeimages/Flickr

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