Tuesday 23 / April / 2024
Tokyo: Nintendo’s third-quarter earnings topped estimates, buoyed by robust sales of new Pokemon 3DS games and a weaker yen that boosted overseas profits, letting the game maker increase its outlook for the year.
Profit for the period through December was 64.7 billion yen ($569 million), the Kyoto-based company said in a statement Tuesday. Analysts had projected 20.5 billion yen, based on the average of estimates compiled by Bloomberg. Revenue fell 21 per cent to 174.3 billion yen.
The results reflect healthy sales for Pokémon Sun and Pokémon Moon, brand-new titles released for the 3DS handheld gaming device in November. These were preceded by the summer blockbuster hit Pokemon Go, which helped reignite interest in the battling pocket monster franchise. That underpins President Tatsumi Kimishima’s vision of smartphone games boosting, not cannibalizing, Nintendo’s core business. Nintendo is preparing to roll out a new console, Switch, in March but said the Animal Crossing smartphone game will be delayed past March instead of the current period.
"The numbers were within the expected range,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co. He noted that operating profit for the quarter came in at 32.3 billion yen, slightly below the average projection. "The operating profit being weaker than expected definitely leaves a negative impression. But if that is because of the Animal Crossing delay, then it simply means that game’s earnings will hit during the next fiscal year and isn’t too big of a worry.”
Net income for the current fiscal year through March will be 90 billion yen, up from the previous outlook for 50 billion yen, Nintendo said. The company maintained its forecast for full-year sales of 470 billion yen.
Nintendo shares, which rose 46 per cent in 2016, fell 1.9 per cent on Tuesday to close at 23,120 yen in Tokyo.
After years of resisting smartphones, Nintendo released Super Mario Run for Apple devices in December, while an Android version will follow in March. Kimishima said in a briefing that the game has been downloaded 78 million times, with more than 5 per cent of users opting to pay about $10 for the full version. That implies earnings of about $40 million, before Apple’s commission. A second mobile gaming title, Fire Emblem, will be released Feb. 2. Kimishima has said the company will aim to release about three smartphone titles each year.
Sales of 3DS handheld device, which debuted in 2011, rose 10 per cent to 6.45 million units in the nine months through December, Nintendo said. "3DS sold well thanks to Pokemon Sun and Moon, and this helped Nintendo have a good holiday season,” Hideki Yasuda, an analyst at Ace Research Institute, said before the results. "The weakening yen should be an added bonus to earnings.”
Nintendo’s new console Switch, which attempts to fuse home and mobile gaming, goes on sale March 3. Nintendo said it expects to sell 2 million units by the end of March, with analysts predicting about 10 to 11 million units in the 12 months after that. While game consoles are usually sold at a loss early in their life cycles, the Switch will be profitable from the start, Nintendo said.
"You can tell customers have huge expectations based on how Switch reservations are doing,” Kimishima said at a briefing. "We want to increase production as much as we can.”
The miniature remake of the classic NES console also provided a minor boost, with the popular Christmas item being sold-out globally after going on sale last quarter. Nintendo sold 196,000 units in the US at a price of $60 during November, researcher NPD reported last month.
The company also benefited from Pokemon Go’s resilient popularity; it was among the top-10 highest-grossing iOS apps in the US on all days except one during the quarter, according to App Annie. Nintendo receives a portion of the game’s profits, which analysts estimate is around 10 percent.
Nintendo got a big boost from the stronger dollar, which gained after Donald Trump’s US election win in November. The company said it expects the yen to trade at 110 yen per dollar, compared with a previous outlook for 100 yen. Nintendo generates about three-fourths of its revenue outside of Japan.
