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Nintendo Boosts Annual Profit Outlook Amid Switch Sales and Weaker Yen

Gaming giant revises fiscal year forecast upward, with solid performance despite Switch's market longevity
Japan
n 7974.TSE Blue Chip 150 Games 75 Entertainment 100 Tech 350
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Nintendo has once again revised its full-year profit forecast upwards, attributing the optimistic outlook to the enduring appeal of its Switch console and the advantageous effects of a weaker yen. The Kyoto-based gaming behemoth now anticipates a net profit of 440 billion yen ($2.97 billion) for the fiscal year ending in March 2024, marking an increase from the previously projected 420 billion yen. This adjustment comes in the wake of a notable 17.9% rise in net profit during the April-December period, reaching 408 billion yen.

Despite a 7.8% decline in Switch sales year-over-year, totaling 13.74 million units over nine months, Nintendo’s confidence in the console remains unshaken. The Switch, nearing its seventh year, has achieved remarkable success, with cumulative sales nearing 140 million units. Nintendo’s President Shuntaro Furukawa expressed the company’s intention to continue focusing on the Switch in 2024, although he acknowledged the uncertainties that lie ahead in the console’s eighth year and refrained from commenting on any successor models.

The company also saw a slight downturn in revenue and operating profit in the October-December quarter, with revenue dropping 6% to 598 billion yen and operating profit decreasing 3% to 184 billion yen, albeit surpassing analyst expectations.

The sustained performance of Zelda- and Mario-related titles contributed significantly to Nintendo’s resilience, alongside a strategic shift towards selling more units with OLED displays. Furthermore, the company’s financials have been buoyed by a weak yen, enhancing the value of overseas earnings when converted back to the Japanese currency.

Nintendo’s stock has witnessed a remarkable 49% surge over the past year, buoyed by speculation over a new console release and the unexpected promotional boost from the “Palworld effect,” referencing a game that has drawn comparisons to Nintendo’s iconic Pokemon series.

As the gaming industry sees an uptick in game releases, Nintendo’s positioning and future prospects remain a topic of interest among investors and analysts. With speculation rife about the potential introduction of a new generation console, the valuation of Nintendo’s stock hinges on future sales performance and strategic decisions in a rapidly evolving market.

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