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Nintendo Reveals Increased Profits
by David Jenkins [PC, Console/PC]
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May 26, 2005
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Officials from Nintendo have released details of the Kyoto-headquartered company’s full year results, which show a higher than expected profit. Operating profits rose by 3.6 percent to ¥111.52 billion ($1.04bn), just short of market expectations of ¥114.5 billion ($1.06bn).
In relation to this, the company’s group net profit rose to ¥87.42 billion ($809.5m), compared with ¥33.19 billion ($307.3m) a year earlier, beating estimates of ¥82 billion – even after these positive estimates had been raised by 17 percent in the wake of the successful Nintendo DS launch.
The huge increase in net profit is somewhat due to foreign exchange gains, since the company has considerable currency investments. Indeed, Nintendo's profits often swing wildly up and down, from year to year, for this reason – which can often given a misleading impression of the company’s otherwise steady finances. Interestingly, sales this year were almost identical to 2004, at ¥515.29 billion.
With the GameCube very much on a downward cycle worldwide, the company’s current focus is on the Nintendo DS portable, which it now expects to sell 12.4 million units of in the current year, compared with the lower-than-estimated 5.27 million units last year. Software sales for DS are expected to more than triple to 35 million units, helped by major new titles such as Nintendogs and Mario Kart DS.
The Nintendo DS’s fortunes have been markedly different in the three different territories, with the console still a million units ahead of the PSP in Japan – with that margin increasing over the last several weeks. Software sales have also been significantly healthier than Sony’s portable rival in Japan thus far. In the U.S., the situation appears to be reversed, although the more recent launch of the PSP makes any final analysis difficult at this stage.
Nintendo is predicting that operating profits in the current year will increase to ¥115 billion ($1.06bn), compared to market expectations of 122.2 billion ($1.13bn), with the hoped-for success of the Nintendo DS and new Game Boy Micro being offset by narrowing expectations for the ailing GameCube.
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