Nintendo's Q1 net profit drops 46% on forex losses

TOKYO, Japan – Japanese entertainment giant Nintendo said Tuesday, July 30, its net profit in the first quarter dropped 46% due to exchange rate losses, but reported steady sales of its Switch gaming platform.

Net profit for the April-June period fell 45.7% from a year earlier to 16.6 billion yen ($150 million), but the Kyoto-based consumer gaming juggernaut kept full-year forecasts unchanged.

"Hardware and software sales increased 13.2% and 25.9% respectively," the company said, with Super Mario Maker 2 and Mario Kart 8 Deluxe both selling well.

Net profit shrank "as a result of foreign exchange losses of 12 billion yen and other factors," it said.

Sales rose 2.4% to 172 billion yen while operating profit fell 10.2% to 27.4 billion yen.

For the fiscal year to March 2020, Nintendo forecasts a 7.2% decline in bottom-line profit but the company has set a higher sales target.

"Nintendo has maintained positive momentum as sales of Switch are expanding steadily, together with powerful titles," Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, told AFP ahead of the release of the earnings.

"Nintendo is expected to stay on course to growth," he said.

Nintendo said in April that sales of its portable Switch console were projected to rise 6% to 18 million units for the current fiscal year, with the release of new titles in its popular Super Mario, Pokemon and Zelda franchises.

The Switch has become a huge global seller, helped by innovative, family-friendly titles that have wowed critics and gamers alike.

The Japanese giant announced earlier this month the release of a scaled back, cheaper version of the console, with an expected release in September ahead of the key holiday shopping season.

Switch Lite, which will sell for $199.99, will be a strictly handheld device that can't be connected to television sets.

Unlike the existing console – a hybrid that can be used for handheld play or hooked up to a screen at home – the new edition's controllers will be permanently fixed on either side of the screen.

It will be small enough to fit in the pocket of an adult's jacket.

Nintendo, the creator of Super Mario and Pokemon, is aiming to roll out the flagship Switch model to China via Tencent to further boost its global reach. 

Its gaming rival Sony on Tuesday reported a 32.8% drop in its first-quarter bottomline profit on one-off factors, with operating profit up.

The PlayStation manufacturer said the plunge reflects in part the firm's exceptional first quarter results last year, fuelled in part by the sale of a part of its stake in Spotify. –