The Kyoto-based company reported operating profit of 101.7 billion yen ($763 million) and sales of 307.5 billion yen in the quarter to the end of June, missing analysts’ average estimates of 115.2 billion yen and 332 .1 billion yen, respectively. The company said manufacturing bottlenecks have affected Switch sales and its current production is behind schedule. It expects to catch up with production by late summer. Software sales fell to 41.4 million from 45.3 million in the same period a year ago, while Switch units fell to 3.43 million units from 4.45 million. The disappointing results echoed those of fellow console maker Sony Group Corp., which cut its full-year PlayStation division profit outlook by 16 percent last week after a sharp drop in game sales in the previous quarter. Nintendo, whose flagship Switch console can be used both at home and on the go, also appears to have suffered from the loss of stay-at-home demand from Covid-19, which Sony blamed for reduced playtime on its platform. The weak yen helped Nintendo the most, whose costs are largely denominated in its home currency. Switch software sales are expected to accelerate towards the end of the year with holiday season releases of new entries in the blockbuster Pokémon and Splatoon franchises. “For a 5.5-year-old system, the Switch is still performing extremely well,” said industry analyst Serkan Toto of Kantan Games. “Nintendo’s software lineup for this calendar year is full of blockbusters like Splatoon 3. I’m not worried about Nintendo, at least not for 2022.” Hardware remains a pain point for the company, as prolonged component shortages and increased material costs this year are likely to put pressure on its prospects. Nintendo stuck to its forecast of selling 21 million units of the handheld-hybrid console, up from 23 million last year. Read more: Nintendo supplier withdraws Outlook uncertainty citing chip (Updates with more details from the earnings release) ©2022 Bloomberg LP
