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Nintendo raises profit forecast but cuts Switch sales outlook
NYSE - LSE
Nintendo raises profit forecast but cuts Switch sales outlook
Nintendo raised its full-year net profit forecast Thursday, citing strong performances by recent game releases, but it again cut its sales target for the Switch owing to global supply chain problems.
The Japanese giant posted its highest-ever annual profit in 2020-21, buoyed by a surge in interest as the coronavirus pandemic forced people to seek indoor entertainment.
Even as restrictions ease, Nintendo said it expects to post a 400 billion yen ($3.5 billion) net profit at the end of the fiscal year in March, up 50 billion yen from its forecast in November.
The Kyoto-based firm also hiked its sales forecast for the year to March 2022 to 1.65 trillion yen, from a previous estimate of 1.60 trillion yen.
It now says it hopes to sell 23 million units of its Switch console in this fiscal year, a further downward revision from the 24 million it announced in the previous quarter.
"In regard to business risk, the extended impact of both Covid-19 and the global semiconductor shortage creates a state of continued uncertainty, with the possibility of future impact on production and shipping," Nintendo said in its earnings release.
"While these and other unforeseen risks exist, we continue to take all necessary measures in conducting business."
Nintendo has faced persistent speculation about its plans for a new version of its Switch console, which was first released in 2017.
But it offered few clues on Wednesday, saying only it would "continue to convey the appeal of the three models and work to further expand the install base".
It said it has now sold more than 100 million units of the various Switch consoles, including the handheld-only Switch Lite, released in 2019, and Switch OLED with upgraded graphics and memory that came out in October 2021.
For the nine months to December, Nintendo logged a net profit of 367.4 billion yen, down 2.5 percent from the same period a year earlier, when virus lockdowns prompted huge demand for video games.
While restrictions may no longer be keeping so many people at home, the pandemic experience has had residual effects on the gaming market, said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.
"Because more people have become aware that games are cheap and interesting entertainment, the number of users has increased," he told AFP.
"The pandemic has been very useful in raising recognition."
K.Morrison--SMC
