Nintendo cuts annual profit forecast 10% as Switch sales slow

5:06 am Tuesday, November 05th, 2024

By Kiyoshi Takenaka

TOKYO (Reuters) -Nintendo cut its operating profit forecast for the year to March 2025 by 10% to 360 billion yen ($2.36 billion) on Tuesday, as sales of its ageing Switch console lost steam.

The forecast is below analyst estimates for profit of 391.4 billion yen.

The Kyoto-based gaming company sold 4.7 million Switch consoles in the first half of the financial year, down from 6.8 million units in the same period a year earlier.

Nintendo lowered its full-year sales forecast for the console, which is in its eighth year on the market, by 7% to 12.5 million units. That would be down 20% from actual Switch sales of 15.7 million units a year earlier.

It also revised down its annual software sales forecast by 3% to 160 million units.

“For a platform that is in its 8th year in the market, both hardware and software enjoy stable demand and brisk sales,” Nintendo President Shuntaro Furukawa said at an online press conference.

“But sales so far fell short of our original projections. Taking into consideration their sales in the first half, we revised our forecasts for both hardware and software, and that led to the earnings revision.”

Furukawa said there was no change to Nintendo’s plan to announce a successor to its long-lasting Switch console in the current financial year to March, but did not go into specifics.

Toyo Securities analyst Hideki Yasuda said Nintendo shares could remain under pressure in the near term as announcement on the new console, a major catalyst for the stock, seemed unlikely by the end of the calendar year.

“Making an announcement this year has gotten quite difficult … You would not want to divert attention to an upcoming console in the middle of the critical year-end shopping season,” Yasuda said.

Shares in Nintendo closed down 3.9% ahead of the earnings announcement, underperforming the Nikkei average’s 1.1% gain.

($1 = 152.3400 yen)

(Reporting by Kiyoshi Takenaka; Editing by Muralikumar Anantharaman, Jacqueline Wong and Bernadette Baum)