Nintendo Co yesterday reported worse-than-expected first-quarter earnings as a weaker yen failed to offset declining hardware and software sales.
The Kyoto-based company reported operating profit of ￥101.7 billion (US$763 million) and sales of ￥307.5 billion in the three months to the end of June, missing average analyst estimates of ￥115.2 billion and ￥332.1 billion respectively.
The company said manufacturing bottlenecks affected Switch sales and its production is behind schedule.
Photo: AFP
It expects to catch up on production from the late summer.
Software sales declined to 41.4 million from 45.3 million in the same period a year earlier, while Switch units fell to 3.43 million units from 4.45 million.
The results echoed those of fellow console maker Sony Group Corp, which last week cut its full-year PlayStation division profit outlook 16 percent after significantly reduced games sales in the previous quarter.
Nintendo, whose flagship Switch console can be used both at home and on the move, appears to have also suffered from the loss of stay-at-home demand from COVID-19, which Sony blamed for the reduced playing time on its platform.
The weak yen made a bigger contribution for Nintendo, whose costs are largely denominated in its home currency.
US gamers spent 13 percent less on video games in the second quarter of this year compared with last year, industry group NPD said.
The impact was more strongly felt by Sony, which reported that play time across PlayStation products was down 15 percent in the period.
Switch software sales are expected to accelerate toward this year’s end with holiday-season releases of new entries in the blockbuster Pokemon and Splatoon franchises.
“For a 5.5-year-old system, the Switch is still performing remarkably well,” said industry analyst Serkan Toto of Kantan Games. “Nintendo’s software pipeline for this calendar year is chock-full of blockbusters like Splatoon 3. I am not worried about Nintendo, at least not for 2022.”
Hardware remains a pain point for the company, as prolonged component shortages and this year’s elevated materials costs are likely to put pressure on its outlook.
Nintendo stuck to its forecast to sell 21 million units of the handheld-hybrid console, down from 23 million in the previous year.
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