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Nintendo logs record pandemic profit but outlook cautious

Nintendo reported its highest ever annual profit Thursday after virus lockdowns caused sales of its blockbuster Switch console to soar.

Nintendo logs record pandemic profit but outlook cautious
In the past, Nintendo's new console sales have tended to peak in the third year after release, and then taper off - Copyright AFP Philip FONG
In the past, Nintendo's new console sales have tended to peak in the third year after release, and then taper off - Copyright AFP Philip FONG
Shingo ITO

Nintendo reported its highest ever annual profit Thursday after virus lockdowns caused sales of its blockbuster Switch console to soar, but the Japanese gaming giant warned the bumper pandemic year would be hard to repeat.

While fresh waves of infections have dashed recovery hopes in many industries, further restrictions have helped extend a run of good fortune for video game companies as people seek indoor entertainment.

The firm said net profit jumped 85.7 percent from a year earlier to 480.4 billion yen ($4.4 billion) for the fiscal year to March — beating its prediction of earnings of 400 billion yen.

It broke its previous profit record set in 2008-09, when it was generating massive revenue driven by the success of its Wii and DS consoles.

Sales in 2020-21 surged 34.4 percent to 1.76 trillion yen, Nintendo said, propelled by the runaway popularity of its Switch console and the family-friendly game “Animal Crossing”, which became a lockdown hit.

But Nintendo forecast a tougher outlook for the current 2021-22 fiscal year, projecting net profit at 340 billion yen on sales of 1.6 trillion yen.

“Regarding the risk associated with Covid-19… the supply of products might be affected if production and shipments are hindered,” Nintendo said in a statement.

“In addition, the production of products might be affected by obstacles to the procurement of parts, including the increase in global demand for semiconductor components,” it said.

The lower target also comes as the Switch, launched in 2017, enters its crucial fifth year. Previously Nintendo’s new console sales have tended to peak in the third year after release, and then taper off.

The Switch was the United States’ top-selling console in 2020, a year that saw record sales of video games, consoles and accessories, according to market research firm NPD group.

Sales of the console, which can be handheld or used with a TV, jumped 37 percent to 28.8 million units for the 2020-21 fiscal year. Nintendo forecast sales at 25.5 million Switch units for this year.

“Nintendo enjoyed strong sales, fully taking advantage of the lockdown demand,” Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, told AFP ahead of the results announcement.

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Yasuda said the Switch “has now become one of Nintendo’s best-selling consoles in history” and gave an optimistic take on the gaming giant’s short-term future.

“I don’t think the outlook is so pessimistic as Nintendo has won new game users during the pandemic,” he said. “If lockdown demand continues during the current fiscal year, it will remain a boost for Nintendo.”

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