Nintendo annual profits soar 36 percent to $1.27bn on Switch sales

AFP , Thursday 26 Apr 2018

File Photo: Nintendo (Photo: Reuters)

Nintendo on Thursday said its annual net profit soared 36.1 percent, thanks to the immense popularity of its Switch console, and announced it was appointing a new president.

Shuntaro Furukawa, 46, who currently oversees marketing and other divisions at the Kyoto-based video game giant, will succeed 68-old-year Tatsumi Kimishima, who has headed up the firm since 2015.

Nintendo has been on a winning streak, with its Switch console flying off the shelves since its launch last year.

The company said its net profit for the year to March reached 139.6 billion yen ($1.27 billion), beating its own expectations despite repeatedly raised annual targets.

Its operating profit saw a six-fold increase to 177.6 billion yen, and its sales more than doubled from the previous year, to 1.056 trillion yen.

Nintendo projected further improvements during the ongoing year to March 2019, forecasting annual net profit would improve 18.2 percent to 165 billion yen and operating profit would reach 225 billion yen, a 26.7 percent rise.

Annual sales are expected to reach 1.2 trillion yen, up 13.7 percent.

"The results for this fiscal year show a very positive trend in global hardware sales for Nintendo Switch, which sold a total of 15.05 million units during this fiscal year," the company said in a statement.

"On the software end, Super Mario Odyssey has been a major hit with audiences worldwide, and sold 10.41 million units," it said, adding that Switch software sales reached 63.51 million units this fiscal year.

Nintendo 3DS hardware sales remained solid even after the launch of Nintendo Switch, with sales during this fiscal year reaching 6.40 million units, the company said.

Analysts saluted Nintendo, creator of Pokemon and Super Mario, for its innovative hardware and expanding game offerings.

"Nintendo Switch is in excellent shape. While demand for the hardware remains solid, its software lineup is expanding," Yasuo Imanaka, an analyst at Rakuten Securities in Tokyo, told AFP ahead of the earnings announcement.

"The yen's appreciation is a concern but sales of Switch are strong enough to offset the negative factor. It is expected to continue to be a hit over the next three years," he said.

Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, echoed the sentiment and pointed to external factors such as currency fluctuation and US trade policy as possible risks going forward.

He said Switch's new line of cardboard DIY accessories, "Labo", could be boosting the game console's popularity.

"Labo is a potential driver to boost Switch, but it may take some time to confirm it," Yasuda said before the earnings figures were released.

"Possible concerns are foreign exchange losses or the impact of additional tariffs in the US imposed by President (Donald) Trump as Nintendo produces hardware in China," he said.

The company said it was appointing Furukawa to replace Kimishima, who is retiring.

Kimishima assumed the position in September 2015 after the sudden death of respected chief executive Satoru Iwata at age 55.

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