Nintendo’s latest earnings release ending March 31st, 2020 was suspended until May 7th (today as of writing this post) due to the current world situation. The financial meeting was held today and revealed some very promising information for sales Nintendo Switch and the current 6 weeks sales of Animal Crossing: New Horizons since launch.
The Nintendo Switch continues to go from strength to strength and has reached 55.77 million units sold worldwide and 356.24 million software units sold. This is incredible news and no doubt that the release of Animal Crossing: New Horizons may have also helped sales. There is no reason why in another year the Nintendo Switch couldn’t overtake 3DS sales which currently sits at 75.77 million hardware and 383.11 million software units sold.
Animal Crossing: New Horizons has had a very successful launch and has fared amazingly due to current circumstances and has sold 11.77 million in the first 11 days of launch before the end of the fiscal year. In six weeks it has reached 13.41 million copies sold worldwide.
As regards Nintendo’s Million Sellers list, the game currently sits in 7th position, taking account of its sales before the end of March 31st, 2020 rather than the six weeks of its launch.
Nintendo also brought up in the Earning Release statement the problems and risks they have endured relating to COVID-19 and the impact it has had and can have in certain areas like production, shipping, development, etc.
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2. Information About Risks Related to COVID-19
The spread of COVID-19 poses the following risks that may impact the Nintendo group. However, this list does not encompass all
risks, and there may be other risks that cannot be predicted.
・ Impact on parts procurement, production, and shipments
It appears that delays in production and shipping are gradually recovering. However, we may be affected if there continue to be issues involving the procurement of necessary components. In addition, if the impact of COVID-19 is prolonged or worsens further, it may disrupt the product supply.
・ Impact on consumption activities
There are restrictions on sales channels in each country due to measures to prevent the spread of the virus including restrictions on movement outside the home and closure of retail stores, and this effect may be prolonged. Also, if physical distribution is suspended, we will not be able to sell hardware or packaged software through e-commerce (electronic sales transactions). In addition, there is a possibility that provision of those services offered via our network may be suspended in the event that we are no longer able to maintain the stability of our network systems.
・ Impact on research and development
If the effects of COVID-19 are prolonged or worsen further, development schedules may be impacted due to the difference in development environments between working from home and in the office. In particular, the impact to overseas subsidiaries and other affiliated companies involved in development is anticipated to be even more difficult to predict than within Japan. As a result of these factors, we may not be able to proceed with the release of Nintendo products and the start of services as planned. This is also true for other software publishers, so it may not be possible to provide game content on Nintendo platforms as planned.
・ Impact of exchange rate fluctuations
Changing circumstances in different countries due to the effects of COVID-19 may cause exchange rate fluctuations that could impact our financial results.
Outlook for the Fiscal Year Ending March 31, 2021
There are concerns that COVID-19 will lead to a global decline in production and consumption.
Given the situation, we will work to continue to convey the appeal of the Nintendo Switch and Nintendo Switch Lite hardware and expand their installed base. Our plans with Nintendo software include the release of Xenoblade Definitive Edition in May and Clubhouse Games: 51 Worldwide Classics in June. In addition, we plan to distribute The Isle of Armor for Pokémon Sword Expansion Pass and Pokémon Shield Expansion Pass by the end of June as the first-ever add-on content for the Pokémon series, and to follow that up with The Crown Tundra in the fall. Other software publishers also plan to release a wide variety of appealing titles, and the
combination of existing popular titles and a continuous stream of appealing new titles will work together to invigorate the platform.
For our mobile business, operations will focus on encouraging more consumers to continue to enjoy playing applications released during this fiscal year like Mario Kart Tour, as well as existing applications that were released in previous years.
Through these initiatives, we expect to see results on the order of 1,200.0 billion yen in net sales, with 300.0 billion yen in operating profit, 290.0 billion yen in ordinary profit, and profit attributable to owners of parent of 200.0 billion yen.
Unit sales of key products used in these forecasts can be found on page 14 under the heading “(4) Consolidated sales units, number of new titles, and sales units forecast” in the section titled “Others.” Exchange rate assumptions for the major currencies used in forecasting are 105 yen per US dollar and 115 yen per euro. Nintendo is preparing for mandatory International Financial Reporting Standards adoption by attending seminars held by outside agencies to collect information, and conducting a deliberation on its adoption. However, the effective date has not been determined.
[Note] Statements relating to future projections represent the judgments made by Nintendo management based on information that was available at the time they
were written, and therefore include certain potential risks and uncertainties. Regarding the impact of COVID-19 on our earnings forecasts, production and sales
volumes may decrease for a certain period of time, but we anticipate that production and sales will be able to meet demand for the full year and that we will be
able to release software titles now in development as planned. That being said, there are many elements of uncertainty, so if there is a need to revise our earnings
forecasts at a later date, we will promptly disclose those revisions. Please be aware that such risks and uncertainties may cause actual results to be materially
different from these forecasts (including but not limited to earnings forecasts and dividend forecasts).
This post was written by Mike Scorpio