Earlier this week Nikkei reported that Nintendo was encountering production issues related to the ongoing chip shortage, which has also been a problem for Sony and Microsoft with its latest hardware. In the updated Q2 financial reports issued by Nintendo it's effectively confirmed that report, though its impact on the company's bottom line looks set to be minimal.
As reported by Nikkei, Nintendo has dropped its estimate for shipped Switch systems from 25.5 million units to 24 million, offering the following explanation.
For Nintendo Switch hardware, we reduced our forecast by 1.50 million units to 24.00 million units. Our shipment forecast for the second half was reduced because of the change in our production plan due to the effects of the global semiconductor shortage. On the other hand, we revised the Nintendo Switch software forecast up by 10.00 million units to 200.00 million units based on the sales performance of the first half.
As you can see, its revised its software sales up - despite the likely delay of Advance Wars 1+2: Re-Boot Camp into the next financial year - to reflect higher than expected game sales to date. Major Holiday releases include Pokémon Brilliant Diamond and Shining Pearl and Grand Theft Auto: The Trilogy – The Definitive Edition; at the moment Kirby and the Forgotten Land is pegged for Spring 2022, so it'll be interesting to see if that squeaks into this financial year with a March release to help boost numbers.
Moving on to the bottom line of Nintendo's profits, just like in Q1 they're well down on the equivalents from last year, when varying degrees of global lockdowns and Animal Crossing: New Horizons drove sales to a staggering level. As you can see in the numbers below, however, Nintendo is still in a strong position and making substantial profits.
- Net Sales - 624.2 billion Yen (approx $5.47 billion USD) - down 18.9% on previous year
- Operating Profit - 219.9 billion Yen (approx $1.93 billion USD) - down 24.5% on previous year
- Net Profit - 171.8 billion Yen (approx $1.5 billion USD) - down 19.4% on previous year
Though the profits are substantial, Nintendo has been under pressure from some shareholders due to those year-on-year declines. The focus will be on in the next financial year, no doubt, to start delivering increases once again.
In the meantime, however, Nintendo is financially extremely stable; the question, as always, will be on how it uses that wealth to maintain its strong position in the gaming market.
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