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Nintendo raises profit forecast but cuts Switch sales outlook

TOKYO (AFP) – Nintendo raised its full-year profit forecast yesterday, citing strong performances by recent game releases, but it again cut its sales target for the Switch over global supply chain problems.

The Japanese giant posted its highest-ever annual profit in 2020-21, buoyed by a surge in gaming as the coronavirus pandemic forced people indoors.

Even as restrictions ease, Nintendo said it expects to post a JPY400-billion net profit at the end of the fiscal year in March, up JPY50 billion from its forecast in November.

The Kyoto-based firm also hiked its sales forecast for the year to March 2022 to JPY1.65 trillion, from a previous estimate of JPY1.60 trillion.

It said it hopes to sell 23 million units of its Switch console in this fiscal year, a further downward revision from the 24 million it announced in the previous quarter.

“In regard to business risk, the extended impact of both Covid-19 and the global semiconductor shortage creates a state of continued uncertainty, with the possibility of future impact on production and shipping,” Nintendo said in its earnings release.

“While these and other unforeseen risks exist, we continue to take all necessary measures in conducting business.”

A traveller looking at an advertisement featuring a Nintendo character at Narita airport, Tokyo. PHOTO: AP

For the nine months to December, Nintendo logged a net profit of JPY367.4 billion, down 2.5 per cent from the same period a year earlier, when its Animal Crossing proved the blockbuster hit of virus lockdowns.

While restrictions may no longer be keeping so many people at home, the pandemic experience has had residual effects on the gaming market, said analyst at Ace Research Institute in Tokyo Hideki Yasuda.

“Because more people have become aware that games are cheap and interesting entertainment, the number of users has increased,” he told AFP.

“The pandemic has been very useful in raising recognition.”

Nintendo’s third-quarter earnings, which include the crucial holiday shopping period, got a boost from the release of several new games, including Metroid Dread and Mario Party Superstars in October and Pokemon Brilliant Diamond and Pokemon Shining Pearl in November.

A third Pokemon title Pokemon Legends: Arceus was released in January, and the firm will release Kirby and the Forgotten Land in March, saying it plans to “strengthen sales through the combination of existing popular titles and a continuous stream of attractive new titles”.

Nintendo has faced persistent speculation about its plans for a new version of its Switch console, which was first released in 2017.

But it offered few clues yesterday, saying only it would “continue to convey the appeal of the three models and work to further expand the install base”.

It brought out a handheld-only Switch Lite model in 2019, and in October 2021 released the Switch OLED, featuring upgraded graphics and memory.

There have been regular reports suggesting a new version with beefed-up graphics capacity could be in the pipeline and analyst at Lightstream Research Mio Kato, who publishes on Smartkarma, said he still expects to see a new release this year or next.