Issued on: 03/08/2022 – 09:30
Tokyo (AFP) – Nintendo said on Wednesday that first-quarter net profit jumped 28 percent year-on-year, mainly thanks to a weaker yen, but hardware and software sales fell due to chip shortages and supply problems Covid-19.
The yen has tumbled more than 10 percent against the dollar this year as skyrocketing U.S. inflation has fueled a widening monetary policy gap — a boon for Japanese companies like Nintendo that sell products overseas.
In the three months to June, the gaming giant reported a net profit of 118.9 billion yen ($893 million), citing the positive impact of the “devaluation of the yen.”
But the company left its full-year forecast unchanged, warning that global semiconductor shortages and other logistical issues could hamper console production and distribution.
New game releases got off to a good start, including “Nintendo Switch Sports” and “Mario Strikers: Battle League,” it said, but sales still fell short of the previous year during the gaming pandemic boom.
“Due to the effects of supply shortages of semiconductors and other components, among other factors, hardware sales decreased 22.9% year-over-year and software sales decreased 8.6% year-over-year,” Nintendo added .
Rising demand for indoor entertainment during the virus lockdown sent the company’s profits to an annual record of 480 billion yen in 2020-21.
The firm nearly hit that figure in the last financial year, with its hit console Switch continuing to perform well and with strong software sales, particularly for “Mario Party Superstars” and the latest Pokemon titles.
But Nintendo now has a more cautious outlook as life returns to normal, slowing the gaming craze, and expects to post 340 billion yen in net profit in 2022-23.
Hideki Yasuda, a senior analyst at Toyo Securities, warned that chip shortages and supply issues related to China’s Covid-19 lockdown will continue to create headaches for Nintendo.
“The company is experiencing significant pressure on its supply chain,” he told AFP ahead of the earnings release. “Switch is sold out in stores. There is not enough supply.’
It will be “very difficult” for Nintendo to meet its annual production target for the console if the problems continue, Yasuda said, after Switch sales fell 20 percent year-on-year in 2021-22.
However, a recession in the United States or elsewhere is unlikely to be a major problem, he said.
“Video games don’t feel the impact of recessions. When the economy is strong, people buy products. When the economy is weak, people spend more time playing games.”
© 2022 AFP
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