Capcom drops full year financial forecast

Japanese publisher Capcom has issued a last minute alteration to the financial projections for its full fiscal year, sending its estimates for consolidated net profits plummeting by YEN 2.4 billion (EURO 16.8 million).

The company revised its consolidated gross profit from previous forecasts of YEN 7.4 billion (EURO 51.8 million) to YEN 6.4 billion (EURO 44.8 million) which consequently impacted on the consolidated net profit estimates.

In a statement issued to investors, the company cited a tax audit of YEN 1.7 billion (EURO 11.9 million) issued by the Osaka Regional Tax Bureau as the main reason for the change, but also noted that slow sales of several titles in North America and Europe has also played a significant role in the change in forecast.

The tax audit relates to the period from March 2000 to March 2005, during which Capcom allegedly failed to disclose YEN 5.1 billion (EURO 35.7 million) in taxable income. The company refutes the claim, and is said to be filing an appeal against the audit with the regional taxation authorities.

However, the sales figures for Western territories have clearly not been as successful as Capcom would have liked, particularly over the holiday season at the end of last year, and have been impacted by the continuing cold start at retail as the final stages of the console hardware transition slowly begin to draw to a close.