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Bandai Namco Faces Financial Downturn Amid Digital Business Challenges

Despite solid toy and hobby sales, valuation losses in online gaming push profits down, prompting a revision of fiscal year forecasts
Japan
b 7832.TSE Blue Chip 150 Games 75 Entertainment 100 Anime 20
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Bandai Namco Holdings, a leading name in entertainment with flagship titles like Gundam and One Piece, reported a discernible slowdown in its financial performance for the third quarter of the fiscal year ending March 2024. On February 14, 2024, the company announced a modest 3.9% increase in consolidated sales to 774,035 million yen. However, this uptick was overshadowed by a significant decline in profitability, with operating income dropping 26.3% to 78,282 million yen, ordinary income falling 23.4% to 89,630 million yen, and net income decreasing 28.5% to 60,398 million yen.

The toy and hobby segment showed resilience, particularly adult products and One Piece trading cards. Nevertheless, the digital gaming sector, crucial for Bandai Namco’s growth, lagged due to poor performance and the cancellation of more than five new online game titles. These adjustments led to a combined valuation and disposal loss of approximately 21 billion yen, severely impacting the company’s bottom line.

In response to these challenges, Bandai Namco revised its full-year earnings forecast downward. While sales projections remain at 1 trillion yen, operating and ordinary income estimates have been significantly reduced. The revision reflects the adverse effects of digital business setbacks, although the sale of 3.11 million shares of Toei Animation could offset some financial strain. This strategic divestiture, capitalizing on Toei Animation’s recent stock price surge, may help recoup some losses, with details on the sale price to be disclosed later. Bandai Namco’s future now hinges on balancing traditional strengths with the volatile digital landscape.

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