Nintendo profit, sales top estimates on robust Switch demand

A visitor playing Nintendo's new Switch game console during its game experience session in Tokyo.
A visitor playing Nintendo's new Switch game console during its game experience session in Tokyo.PHOTO: AFP

TOKYO (BLOOMBERG) - Nintendo's quarterly profit topped estimates as more people bought its new Switch gaming machine, lifting expectations for brisk sales during the holiday shopping period.

Operating profit for the April to June period, the first full quarter of sales for the Switch, was 16.2 billion yen (S$197 million), exceeding analysts' average projection for 10.6 billion yen. The company sold 1.97 million Switch units during the period, and kept its forecast for 10 million shipments through March. Revenue more than doubled to 154.1 billion yen, topping analysts' prediction for 139 billion yen.

Nintendo is betting that the Switch will fuel a new era of growth as more people embrace its dual role as a gaming device that can be used at home, or on the go. That has also raised questions over whether the company is abandoning its two-gadget strategy of selling consoles and handheld gaming devices. While sales have been solid, analysts and investors are looking for signs that Nintendo will boost production or forecasts.

"Nintendo has already said it will increase production during the summer, so this is a chance to confirm how that is coming along," Mr Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities, said before the earnings release.

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Nintendo shares rose 1.3 per cent in Tokyo prior to the results, leaving them up by more than 50 per cent since the Switch went on sale.

Last month, Nintendo apologised to customers in Japan for Switch shortages and promised to increase production, without providing a timeline or further details. The company sold 2.74 million units in the device's first month in March, topping its outlook for 2 million. It forecasts 10 million units globally this fiscal year, while analysts are projecting 13 million shipments, according to the average of estimates compiled by Bloomberg.

For the older handheld device 3DS, Nintendo sold 950,000 units during the quarter, a slight increase from a year earlier.

Switch demand in the latest quarter got a boost from the launch of several key titles, including Mario Kart 8 Deluxe, Arms and Minecraft. In total, the company sold 8.14 million Switch software titles during the period and kept its forecast for 35 million games this fiscal year.

"As long as we get decent figures, people will assume it will sell even more during the holiday shopping season," Mr Kawasaki said, without providing a specific target.