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Ubisoft reveals small increase in annual sales

French publisher Ubisoft has released its financial statement for the fiscal year ended March 31st, revealing higher sales but a dip in profits following continued next-gen investments.

French publisher Ubisoft has released its financial statement for the fiscal year ended March 31st, revealing higher sales but a dip in profits following continued next-gen investments.

Net sales for the year - which saw a widespread slump in the software market as a result of the current hardware transition - were posted at 547.1 million Euro, up 3 per cent on the same period a year earlier.

Annual net income fell to 11.9 million Euro, compared to 24.7 million Euro the previous year. Additionally, operating income was just 0.4 million Euro, dropping considerably from last year's 33.5 million Euro.

Ubisoft attributes the decline to a strategic increase of 18.4 million Euro in advertising and marketing expenses, designed to drive dwindling sales on current generation platforms.

The publisher admits that higher sales were expected as a result of its expenditure, but notes that activity on current platforms "has in fact declined more rapidly than anticipated."

Heavy investments in the next-generation console platforms have also impacted on the publisher's profitability in the short term, with Ubisoft increasing its research and development expenditure by 12.8 million in order to support its strategy of "growth and acquisition of market share for the new consoles."

Ubisoft highlighted numerous succeses achieved during its fiscal year, including the global success of Peter Jackson's King Kong, which sold 4.5 million units. The company also enjoyed tremendous success with Tom Clancy's Ghost Recon: Advanced Warfighter, generating almost 30 per cent of its sales from next-gen software and securing a 20 per cent market share on the Xbox 360.

Looking forward, Ubisoft expects a sales growth of 5-10 per cent, boosted by the launch of Sony and Nintendo's new consoles and the release of five high-potential brands. Sales of 60 million Euro are predicted for the first quarter of fiscal 2006-2007 and further growth is expected as the market continues to stabilise.

Ubisoft CEO Yves Guillemot commented: "The investments made in the last two years will enable us to launch 5 new brands and new Hollywood licenses. In this context, the pre-tax operating profit before stock options should show a very strong improvement."

"We will pursue our offensive strategy of investment in new consoles in order to continue to grow faster than the market thanks to the creation of new brands and to our entry into new games segments. We will thus be able to take full advantage of the strong upturn in the sector predicted for 2007-2008 onwards," he concluded.

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Paul Loughrey

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