Sale of Seattle Mariners stake keeps Nintendo in the black
Six month figures show company shortening sales forecasts for full year
Nintendo has suffered at the hands of exchange rates again in its six-monthly financial report, with a strong Yen hurting the bottom line in an already tough year.
Net sales for the six months ending September 30 were down by a third year-on-year to 136 billion Yen, with operating income nearly 6 billion Yen in the red and ordinary income falling to a 30.8 billion Yen loss. However, net profit was 38.3 billion Yen, thanks to NoA offloading its share in the Seattle Mariners baseball team for 62.7 billion Yen.
Positives for the company during the period were strong sales for Kirby: Planet Robobot and an uptick in 2DS, plus increased catalogue sales of Pokemon games thanks to the resurgence of the IP after the success of Pokemon Go. As a partial result, 3DS sales were up by 19% year-on-year to 2.71 million, with 3DS software 'holding steady' at 19.23 million units. The company is shipping 800,000 Wii U consoles in the full fiscal year. Wii U software sales dropped by 53% to 0.56 million units.
"Along with this background, we felt the impacts of a strengthening yen, resulting in an operating loss of 5.9 billion yen against net sales of 136.8 billion yen of which overseas sales were 97.3 billion yen or 71.1% of the total sales"
Nintendo still managed to sell 3.8 million Amiibo, despite releasing no new software which utilises the toys. The platform holder also gave an indication of the money made from Pokemon Go, which it recorded as a non-operating profit of 12 billion Yen under equity gains. A statement from the company reads:
"Along with this background, we felt the impacts of a strengthening yen, resulting in an operating loss of 5.9 billion yen against net sales of 136.8 billion yen (of which overseas sales were 97.3 billion yen or 71.1% of the total sales). We have also included 12.0 billion yen of share of profit of entities accounted for using the equity method related to The Pokémon Company and other companies, but we incurred foreign exchange losses totaling 39.9 billion yen, resulting in an ordinary loss of 30.8 billion yen.
"However, due to the sale of part of our ownership in the company that manages the Seattle Mariners Major League Baseball team, we recorded gain on sales of investment securities totaling 62.7 billion yen as extraordinary income, meaning that profit attributable to owners of parent was 38.2 billion yen."
There's hopefully a brighter horizon ahead, however, with the newly christened Switch due in March, a brand new Pokemon title due for 3DS and the first ever Mario mobile game coming soon, followed by both Fire Emblem and Animal Crossing apps. Nonetheless, Nintendo has still shortened its forecasts for sales, ordinary and operating profit for the full year, with net profit up thanks to the Seattle Mariners. However, given that the period is highly unlikely to account for early Switch sales, and predicts an even stronger Yen, the revision is not as damning as it may seem.
"The Company modifies its financial forecast in consideration of a stronger-than-expected yen in foreign currency exchanges, sales performance for the six months ended September 30, 2016, the revision of sales prospects after the second quarter, and gain on sales of investment securities totaling 62.7 billion yen recorded as extraordinary income for the quarter since the Company's wholly-owned subsidiary, Nintendo of America Inc., has sold a part of its ownership in the company that manages the Seattle Mariners Major League Baseball team. Assumed exchange rates after the second quarter and at the end of the fiscal year have been revised from 110 yen to 100 yen per U.S. dollar and from 125 yen to 115 yen per euro."
For more on Nintendo's recent, albeit sparse, Switch announcement marketing, read our analysis here.