Video game giant Nintendo Co yesterday chopped its full-year net profit forecast in half, saying slowing sales and a recent pick up in the Japanese currency were eating into its bottom line.
The Kyoto-based company said it now expected to eke out a ¥17 billion (US$150 million) net profit in the fiscal year through March, down from an earlier ¥35 billion target.
The company also reduced its sales and operating profit forecasts. Nintendo has cut its annual targets at least twice before.
Nintendo’s announcement comes weeks after it said its nine-month operating profit from April to December had soared 35 percent, and as it gears up for its first foray into smartphone gaming next month.
The company credited its latest earnings results to strong demand for its Wii U console games, including shoot-’em-up hit Splatoon and the 3DS portable handheld console, although holiday sales disappointed.
Japanese exporters such as Nintendo have seen their profits calculated in yen soar in recent years as the unit has weakened precipitously against the US dollar and other currencies.
The fall made them more competitive overseas and meant the profits earned abroad were worth more in yen. However, Japan’s currency has reversed course as a plunge in equities and commodities fueled by fears about the world economy boosted buying of the yen, which is seen as a safe bet in times of turmoil.
On Friday, the US dollar bought ¥112.83. The unit was about ¥121 at the end of last month and had climbed to more than ¥125 last summer.
“Given the sales trend ... and the higher yen, we revised our earnings forecast,” Nintendo said.
The company added that it now expected revenue and operating profit to come in at ¥500 billion and ¥33 billion respectively, from an earlier ¥570 billion and ¥50 billion forecast.
“Lack of hit titles dragged down 3DS sales during the holiday season and looks like the slump extended to January and February,” Iwai Cosmo Securities Co analyst Tomoaki Kawasaki told Bloomberg News. “Nintendo is at the end of the hardware cycle, so neither 3DS nor Wi U are likely to see much growth.”
Earlier this month, Nintendo started registration for Miitomo, a free-to-play messaging-based application.
President Tatsumi Kimishima has said the next smartphone game will feature one of Nintendo’s beloved characters and the company’s work on a successor to the Wii U, code-named NX, remains on track.
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