Nintendo said on Wednesday that first-quarter net income rose 28 percent year-on-year, thanks largely to a weaker yen, but hardware and software sales fell due to a chip shortage and Covid-19 delivery problems.
The yen has fallen more than 10 percent against the dollar this year as skyrocketing US inflation fuels a widening monetary policy divide – a boon for Japanese companies like Nintendo that sell products abroad.
For the three months to June, the gaming giant reported net income of 118.9 billion yen ($893 million), citing the positive impact of the “yen’s depreciation.”
However, the company left its full-year guidance unchanged, warning that global semiconductor shortages and other logistical difficulties could hamper console production and sales.
New game releases are off to a good start, including Nintendo Switch Sports and Mario Strikers: Battle League, but sales have not yet matched last year’s levels during the pandemic gaming boom.
“Due in part to the impact of supply shortages for semiconductors and other components, hardware sales fell 22.9 percent year-on-year and software sales fell 8.6 percent year-on-year,” Nintendo added.
Soaring demand for indoor entertainment during the virus lockdown pushed the company’s profits to an annual record 480 billion yen in 2020-21.
The company almost reached that number in the last fiscal year, with its blockbuster Switch console continuing to perform well and strong software sales, particularly for Mario Party Superstars and the latest Pokemon titles.
But Nintendo now has a more cautious outlook as life returns to normal, causing the gaming frenzy to slow, and expects to report 340 billion yen in net income in 2022-23.
Hideki Yasuda, a senior analyst at Toyo Securities, warned that chip shortages and supply issues related to China’s Covid-19 lockdowns would continue to cause headaches for Nintendo.
“The company is feeling significant pressure in its supply chain,” he told AFP before the results were released. “The Switch is sold out in stores. There are not enough supplies.”
It will be “very difficult” for Nintendo to meet its annual console production target if the problems continue, Yasuda said after 2021-22 Switch sales fell 20 percent year-on-year.
However, a recession in the United States or elsewhere should not pose a major problem, he said.
“Video games are not feeling the effects of recessions. When the economy is strong, people buy products. When the economy slows, people spend more time gaming.”
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