Nintendo Co. reported quarterly earnings in line with expectations, thanks to solid software sales and a weak yen that outweighed slowing momentum of the aging Switch console. The company cut its Switch sales forecast for the year by 10% to 19 million units.
(Bloomberg) — Nintendo Co. reported quarterly earnings in line with expectations, thanks to solid software sales and a weak yen that outweighed slowing momentum of the aging Switch console. The company cut its Switch sales forecast for the year by 10% to 19 million units.
The Kyoto-based company said its operating profit was 118.7 billion yen ($809 million) in the quarter ended September, up from 100.2 billion yen in the same period a year ago. The consensus estimate was for a profit of 117.6 billion yen.
Splatoon 3, the latest installment of a core Nintendo franchise, became the company’s fastest Switch software launch ever, with 3.45 million units sold domestically over its first three days. Its September launch gave a lift to the hit-driven sales of Nintendo’s five-year-old Switch console and that momentum is expected to be sustained by the Nov. 18 launch of the latest entries in the Pokemon series.
Nintendo also got a big boost from this year’s precipitous drop in the yen’s value. The currency trades at its lowest level against the US dollar in more than 30 years, and Nintendo gets four fifths of its sales from outside Japan while its software production costs are denominated mostly in the domestic currency.
The company on Tuesday stuck to its full-year earnings forecast for an operating profit of 500 billion yen, which falls short of the consensus estimate of 592 billion yen.
Read more: Nintendo Surges After Record Debut of New Switch Game
Analysts are closely tracking the Switch console’s momentum ahead of the year-end holiday season as supply chain constraints wane. Nintendo has said demand for the handheld-hybrid console remains strong, despite the gadget’s age, and slowing sales in recent times have mostly been due to chip shortages and logistics issues stemming from the pandemic.
“The Switch has reached the 70% mark of its life cycle, but Nintendo should be able to survive with the current hardware lineup for the time being,” UBS Securities analyst Kenji Fukuyama said.
–With assistance from Yuki Furukawa.
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