Nintendo Profits Up 50% As Retailers Struggle To Get Switch Gaming Consoles
As demand for home gaming booms Nintendo has taken the unusual move of reporting financials early claiming an opening profit that is up 50%.
Demand for the Japanese Companies games and their Switch console is soaring with Australian retailers struggling to get stock. JB Hi Fi has stock while The Good Guys is out of stock according to their online sites.
Like most gaming Companies Nintendo has been struggling with a production and logistics bottleneck as Animal Crossing’s popularity triggered a global Switch shortage.
The Company is now claiming that Switch production in China and Vietnam has stabilized, they have also expanding their manufacturing capability in Malaysia in small volumes, management said.
“The Switch production situation has now completely recovered, and we have no issues with that,” Furukawa said.
The Company is forecasting a US$4.3 billion operating profit for the year, management boosted its revenue forecast to 1.4 trillion yen, from 1.2 trillion yen, and its Switch forecast to 24 million units, up from 19 million according to Bloomberg.
Nintendo also reported an operating profit of 146.7 billion yen for the September quarter, compared with the 96.2-billion-yen average estimate. Revenue came to 411 billion yen, versus the 321.4 billion yen anticipated.
Bloomberg claimed that ‘The rare mid-year outlook hike underscores how the gaming industry is riding a COVID-19-era surge. The Japanese developer of hit franchises from Mario to Zelda has outperformed thanks in part to Animal Crossing, which emerged as the online forum of choice for millions during the pandemic. It’s one of few gaming companies to report an increase in revenue from the June quarter to the September quarter.
“The Switch hardware momentum remains strong, and we think that’s because production has recovered so customers who were previously unable to find a Switch on store shelves are now able to,” President Shuntaro Furukawa said in a conference call after results.
The good news comes as Sony which is preparing to launch a new PlayStation for the holidays, last week raised its fiscal-year operating profit outlook by 13%.
Nintendo has been riding the success of Animal Crossing, selling 3.64 million copies in the September quarter. Digital sales more than doubled in the first half, a trend that helps boost profit margins.
“Nintendo’s switch software sales in 2Q were quite impressive and yet the guidance still appears quite conservative there,” said Bloomberg Intelligence analyst Matthew Kanterman. “Guidance implies switch software units down 37% in 2H which is clearly just too low.”