Nintendo expects 27 percent annual profit jump on strong Switch sales – Reuters Politics

TOKYO (Reuters) – Japan’s Nintendo Co Ltd said on Thursday it expects operating profit to rise 26.7 percent in the year through March to a nine-year high, as its Switch games console maintains sales momentum in its second year.

Logos of Nintendo Switch game console are seen at an electronics store in Tokyo, Japan March 3, 2017. REUTERS/Toru Hanai

The initial success of the hybrid home-portable Switch has boosted Nintendo’s gaming software sales and encouraged more third-party publishers to make games for the console, a cycle which could further push up console sales.

The Kyoto-based company also said it named Managing Executive Officer Shuntaro Furukawa as new president to succeed Tatsumi Kimishima, effective after the general shareholders meeting in June.

Kimishima, a former banker who succeeded charismatic leader Satoru Iwata in 2015, decided to step down as he has “fulfilled almost fully his responsibilities” to turn around the company, he said at an earnings briefing.

Nintendo estimated profit to reach 225 billion yen ($2.06 billion) from 177.56 billion yen a year prior. If achieved, it would be Nintendo’s highest operating profit since the year ended March 2010.

The outlook compared with the 308.72 billion yen average of 21 analyst estimates in a survey by Thomson Reuters I/B/E/S.

Nintendo is aiming to sell 20 million Switch consoles in the financial year started April, confirming its previous forecast made in January.

FILE PHOTO: Nintendo’s Kirby toys are displayed in the Nintendo store in New York, U.S., November 15, 2017. REUTERS/Brendan McDermid/File Photo

Sales of the console reached 15 million units in the year ended March, bringing the cumulative total to 17.8 units since its global release in March least year.

The strong sales has fuelled hopes that the Switch could repeat the success of the first Wii console, leading to a doubling of Nintendo’s stock price to nine-year highs earlier this year.

The Wii, which debuted in late 2006 and sold over 100 million units, drove the company’s annual profit to a record high of 555 billion yen in the year to March 2009.

The succeeding Wii U, on the other hand, flopped as third-party developers baulked at its complexity, leading to a shortage of titles and sluggish earnings.

Aiming to end its history of booms and busts, Nintendo is striving to broaden the gaming population. It launched this month “Labo” LEGO-style accessories for the Switch console that users can build themselves on cardboard sheets – a step analysts said could attract a younger audience raised on smartphone gaming.

Mizuho Securities senior analyst Takeshi Koyama said in a report to clients this month that Labo boosts “potential for greater penetration of the Switch”. Its wide-ranging appeal is attracting families normally reluctant to buy their children console gaming systems, he said.

($1 = 109.2900 yen)

Reporting by Makiko Yamazaki and Yoshiyasu ShidaEditing by Christopher Cushing

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