TOKYO - Nintendo Co. scored big over the holidays with its Wii gaming console and DS handheld device, but faltered against a surging yen that undermined profits and forced the company to slash its full-year forecast.
Group net profit fell 18 per cent to 212.5 billion yen (US$2.35 billion) in the nine months from April through December , the Kyoto-based game maker said Thursday. Revenue rose 17 per cent to 1.54 trillion yen.
Nintendo, which makes about 90 per cent of its income overseas, said its performance was "adversely impacted by a large exchange loss due to the sharp appreciation of the yen."
Nintendo's U.S. arm is based in Redmond, Wash.
The company did not provide a quarterly breakdown, but calculations by The Associated Press showed that net profit for the October-December quarter tumbled almost 47 per cent to 67.6 billion yen ($747.9 million), while sales climbed 12.5 per cent to 699.5 billion yen.
As a result, Nintendo sharply downgraded its outlook for the full fiscal year through March. The company now estimates net profit of 230 billion yen from its previous forecast of 345 billion yen, which would have been a record high.
The new forecast is well under the 303.9 billion yen expected on average by analysts surveyed by Thomson Reuters and suggests that the company will probably fall short of last year's net profit of 257.3 billion yen.
Mia Nagasaka, an analyst at Barclays Capital in Tokyo, said the latest numbers confirm that Nintendo's core business remains "healthy" but that currency fluctuations are severely hurting earnings.
"The forex issue has been priced into the share price," she said. "However I think it was a little bit shocking that they revised down their earnings forecast."
The company is one of the few bright spots for Japan Inc., as sales of the Wii and DS surge despite a global slowdown. But as the latest numbers show, the company has not been immune to currency fluctuations that are eating away profits at other Japanese exporters.
Nintendo's previous estimate was based on the assumption that $1 would buy about 100 yen. That has now been lowered to 90 yen based on recent foreign exchange levels.
Demand, however, remains strong, with its two hit products -- the Wii and DS -- smashing holiday and annual sales records in the U.S., its biggest overseas market. Sales would likely have been even better had the company not struggled with supply shortages.
The company sold 2.14 million Wii consoles in the U.S. in December, pushing its 2008 total to an industry record of 10.17 million units sold in a single year, according to research group NPD Group Inc. Americans bought 3.04 million DS units in December, up 17 per cent from the previous year and a single-month record for Nintendo.
The top four best-selling console games in 2008 were "Wii Play," "Mario Kart Wii," "Wii Fit," and "Super Smash Bros. Brawl" -- all Nintendo products.
Worldwide, the company expects to sell a record 26.5 million Wii units in the fiscal year through March.
For the April-December period, operating profit -- which reflects core business performance but excludes taxes, dividends, asset sales and other items -- increased 27 per cent to 501.3 billion yen.
Nintendo shares lost about half their value in 2008 amid steep declines in Tokyo equity markets. During trading Thursday, the issue closed up 1.6 per cent at 32,300 yen on the Tokyo Stock Exchange. It released earnings after the market closed.
The results were based on Japanese accounting standards.
