Nintendo reports 34% rise in profits after strong Switch sales

Japanese video game maker Nintendo has recorded a 34% surge in profits in the first half of the financial year after strong sales of products for its Switch console like paint-shooting game Splatoon 3.

That prompted the maker of Pokemon and Super Mario games to raise its profit forecast for the April-March financial year to 400 billion yen (£1.79bn), from an earlier projection of 340 billion yen (£2.02bn) profit.

Even the better forecast is below what Nintendo earned in the last financial year, at 477.7 billion yen (£2.84bn).

Entertainment companies got a boost from the pandemic because people tended to stay at home more. That advantage is likely to wear off as coronavirus restrictions ease.

Japanese exporters like Nintendo are also getting a boost from a weaker yen, which lifts the value of their overseas earnings when translated into yen. The US dollar, trading at about 110 Japanese yen a year ago, is now at nearly 150 yen.

Net profit at Kyoto-based Nintendo 230.45 billion yen (£1.37bn) during the six months through September, up from 171.8 billion yen (£1.02bn) the previous year.

First-half sales totalled 656.97 billion yen (£3.91bn), up 5% from 624.3 billion yen (£3.71bn).

Nintendo said shortages of computer chips and other components caused by Covid-19 lockdowns and other disruptions hurt production. Nintendo Switch sales fell 19% from the previous year to 6.68 million units.

Other Japanese companies like Sony and Toyota have also been hurt by the chips shortage.

Other popular Nintendo game software released during the last six months include Nintendo Switch Sports, which sold 6.15 million units, and Mario Strikers: Battle League, at 2.17 million units.

The Mario Kart and Kirby games, released earlier, also sold briskly, as did offerings from outside publishers, resulting in 15 million-seller games for the Switch during the six month period.

Nintendo’s software sales grew by 1.6% year-on-year to 95.41 million units. Downloadable online games also did well, it said.

Nintendo said the crunch in chips and other parts would likely improve gradually over the coming months. Christmas and the New Year’s holidays are crucial times for Nintendo’s business.

“By continually working to front-load production and selecting appropriate transportation methods in preparation for the holiday season, we will work to deliver as many consoles as possible to consumers in every region of the world,” the company said.

In game software, Bayonetta 3 is set for release in October, followed by Pokemon Scarlet and Pokemon Violet in November, Fire Emblem Engage in January 2023, and Kirby’s Return to Dream Land Deluxe in February 2023, according to Nintendo.

Nintendo expects to sell 19 million Switch consoles in the current financial year. It earlier expected to sell 21 million Switch machines. Cumulative Switch sales around the world have topped 114 million machines.

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