While the overall picture in sales terms was relatively rosy for Nintendo according to its latest financial figures, shareholders aren't doing quite as well as the revenue figures suggest. Despite increases in sales and a 2.4% increase in revenue to 172 billion yen, profit has taken a 45.7% dive compared to the same three month period last year.
The three-month period ending 30th June 2018 saw profit (specifically 'profit attributable to owners of parent') of 30.6 billion yen (nearly $282 million) compared to the latest figure of 16.6 billion (almost $153 million). Of course, the latter figure is still not to be sniffed at, but the massive slide despite improved sales might raise some eyebrows.
This drop is put down primarily to exchange rates cutting into profits. The report cites 'foreign exchange losses of 12 billion yen and other factors' for the decrease, so it appears that outside and, regrettably, uncontrollable elements have taken their toll on the balance book this quarter. We certainly wouldn't be happy losing over $110 million at the bureau de change.
The company is already investigating ways to mitigate the effects of otherwise uncontrollable increases in costs but there's no denying that the current exchange rates aren't helping the Kyoto company's bottom line at the moment.
[source nintendo.co.jp]
Comments 36
Dagnabit, NL, what's the point of this article? HOW, pray tell, is a loyal fan supposed to blame Nintendo, third parties or the other usual culprits on the basis of exchange rates? 😡😜
Countries gotta raise taxes for more war. Always more war. The military industrial complex must be placated.
and that is why people saying "PS4 failing in Japan is no big deal, they're doing great internationally" are wrong. Due to these exchange rate issues, Sony will always care A LOT about how well their products are doing domestically.
That was me buying on foreign eShops, taking advantage of better currency, I admit it.
Thank you Nintendo.
But your profits are in another currency.
Well they've just invested a load in putting out another SKU, haven't they? That costs money now but should keep the Switch revenue coming in for longer.
So that means that yen is stronger compared to other currency this year?
Anyway, it is probably also duo to bigger expenses as in the las 3 months they created a new studio under Monolith Soft, putting money to the Nintendo park in universal Japan (and I think another one in Orlando) that will open up sometimes soon, building several physical and online stores over the world like in Japan, Israel and other places probably and they are expanding and hiring many people in the past 2 years (more than 1000 new employees in the last 2 years which was above 20% increase and the numbers keep on growing
They know what they are doing as it seems
@GrailUK okay that's too funny hahaha!
@Heavyarms55
The US has cut taxes. And Japan doesn't have a military.
They are being lazy...
Give us a proper virtual console, or at least proper emulated old games like luigi's mansion, wave race etc.
And some hd remakes. I don't understand why mario galaxies are playable in china on a foreign device and it's not playable on ninty's current device...
"A Bethesda.net account is required to receive profits. Please connect to the internet to continue."
Am enjoying the amateur economic detective work.
Really they lost 19.6B Yen on the exchange rates, as they had a foreign exchange gain this time last year of 7.5B Yen. Which basically accounts for almost the whole difference.
@Tantani it depends if they are buying or selling
That's a serious amount of money they are attributing to the currency exchange... don't remember seeing much else in the news about the Yen performing so poorly.
Also, surely this isn't isolated to the past 3 months? Currency fluctuates by the hour, so this must have had an impact in the last quarter too.
So if you balance your losses from currency from both quarters, I'd suspect there's still a big discrepancy between the two that Nintendo have neatly labeled as "other factors".
Switch Lite and Pokemon will sort it all out - so no need to worry - but there's clearly missed opportunities that are starting to add up into a considerable loss of revenue.
I think a September Direct is on the cards, and there could be a surprise or two. We're still waiting for a December title (watch it end up being a Smash Bros DLC), aren't we?
@nocdaes But they're not comparing the last three months, they're comparing with the same period last year. The figures are all in the report, there's 3.6 billion in increased costs and 19.6B difference due to exchange rates.
(and it wouldn't necessarily mean the yen was performing poorly)
@nocdaes It's the other way around, the Yen was very weak for a while which is now Nintendo managed to float the WiiU era without looking as bleak as it was, but then Yen has rebounded and is strong again, so in pure monetary units, the numbers from export don't look as good on paper. Nintendo is predominantly an export company. They do worse when the Yen is strong, not weak. Sony gets hit even harder by a strong Yen as a nearly 100% export company.
@manu0 The PlayStation brand is now headquartered in the U.S.
Also the PS4 has done quite well in Japan.
@RickD lol. Smash at nearly 15M in 7 months, a port with 4M+ and a game that sold 2.4M in 3 days... I believe all AAA woukd be happy with those...
Ok people it goes like this. The U.S. stock market has been doing great but that has come at the expense of devaluing the currency, to, amongst others, the Japanese yen. When Nintendo sells a game for $60 US to their biggest market, the U.S., that translates into less Yen for their company, which is bad for shareholders. In short, Japanese economy strength is great for Japan, not so great for Nintendo. That's why Trump yammers on about these countries devaluing their money (obviously false in this case) because it makes their companies favorable to shareholders compared to American companies.
A strong yen also means that Nintendo’s cash on hand is worth more in dollar terms, which is a good thing. I think that Nintendo should be using that cash horde to open more Nintendo retail stores around the world.
The July-September quarter is going to look very good compared to the period last year, with all of these new games being released now and with the revised Switch and the Switch lite coming out in August and September.
@Heavyarms55
Thats not how this stuff works dude. Dont bring extreme politics into this
The problem for Nintendo is that now is when the profits need to be high, when the Switch is selling so well.
The profit being made dosen't seem to be enough considering the success.
This is down to the exchange rates plus now basically being dependant on one console.
The lite should help partly address this, a further more portable option against the standard Switch. However, I can't see Nintendo getting back to the glory days of Wii/Ds... That market just does not exist in the same capacity.....
I do think they are doing the best though considering the circumstances. Continued hits on the Switch and big sales of the Lite should help them going forwards.
Also Pokemon/Animal Crossing will drive continued great sales into 2020...
@GrailUK It could have 100 likes and this comment would still be underrated.
Well I'll say one thing, the Switch has become my primary game system even though I have a PS4. The only exception are Sony's first party games or games that just don't run well on Switch, which aren't many at this point. But every other game gets bought on my Switch. And I have no plans on buying PS5 anytime after its launch. Just too much money when I can wait a few years and get all the hits half price. Also my backlog is stupid and huge. I am getting too old to keep moving on, I want to enjoy the past for a while too.
Increased sales could refer to cheaper eshop games, as well, so sales are up for cheap things but down for everything else. You've got to bear in mind that the entire point of these statements is to avoid worrying shareholders and losing even more money, not to accurately explain the situation.
Sony is obviously also a Japanese company and just had their largest Q1 operating profits of all time so there's way more to this that blaming exchange rates.
https://www.pushsquare.com/news/2019/07/playstation_propels_sony_to_best_q1_operating_profit_ever
Of course profit is half of what it used to be: now there's only 1 console, there used to be a home console and a portable. Making a 2-in-1 console like Switch will inevitably killed the 3DS despite Nintendo wanting it to survive.
@Matroska That really isn't an apple-to-apples comparison. Nintendo operates pretty much out of Japan with regional offices in North America and Europe. Sony Interactive Entertainment is located in California (with regional offices in Japan & Europe) so their profits wouldn't be as effected by the Yen since they can just keep them in Dollars.
This is still a good result, for the quietest qrt of the year, with only a single major release.
The operating profit is actually down 10% which reflects the investments in the new SKU and software products.
There is very little Nintendo can do about the currency losses - given the current insanity in the US, Brexit in the UK, and instability in other parts of Europe - this is a very decent result.
They are nicely setup to have a massive 3rd qrt and lead into a boom period in Xmas.
@Matroska you have to dig into those figures. Sales for PlayStation and network and down. Operating income for the same is down 15%. They also lost a bit on Forex.
They had a good quarter because imaging (camera) is up, and music is up. Sony is still a huge company, and PlayStation is just a fraction of it.
Nintendo made a lot on Forex last year for this qrt. That's why it's a poor comparison for this qrt. Got to pay the piper sometime...
It's delusional to only expect raising profit. It is an up and down game and you have to please the player, which is next to impossible.
I have no idea what profit Nintendo make from third party games compared to its own game's, but I reckon sales of Nintendo games are not as high as when third party and indi games were less available. When you give the gamer more choice it does mean they will spend more. They will spend less on Nintendo games.
@PBandSmelly Kinda is dude. Would be nice to live in a fairy tail where that wasn't the case, but those taxes rarely if ever are used for anything positive.
@Dezzy Yes, Japan has a military. They call it the "Self Defense Force" but it's a military. And one of the strongest in the world. What Japan doesn't do is invade other countries anymore, unlike the US which picks a new fight every few years. And the US hasn't cut taxes, that's propaganda. But You go ahead and buy into it if you want.
@Heavyarms55
Pretty much everyone in the US got a tax cut in 2017. No idea how you've convinced yourself otherwise. The data is clear:
https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#Individual_income_tax
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