Despite a drop in Switch sales projection, Nintendo's profit remains down but on track

Despite a drop in Switch sales projection, Nintendo's profit remains down but on track

Earlier this week, Nikkei reported that Nintendo was encountering production issues related to ongoing chip shortages, which has also been a problem for Sony and Microsoft with their latest hardware. In the updated second quarter financial reports issued by Nintendo, that report is indeed confirmed, although its impact on the company's results appears to be minimal.

As reported by Nikkei, Nintendo has lowered its estimate of the Switch systems shipped from 25.5 million units to 24 million, offering the following explanation.

For Nintendo Switch hardware, we lowered our forecast by 1.50 million units to 24.00 million units. Our shipment forecast for the second half was lowered due to the change in our production plan due to the effects of the global semiconductor shortage. On the other hand, we revised the forecast for Nintendo Switch software upwards by 10.00 million units to 200.00 million units based on the performance of the first half sales.

As you can see, it has revised its software sales higher, despite the likely delay of Advance Wars 1 + 2: Re-Boot Camp in the next financial year, to reflect higher than expected game sales to date. Top Christmas releases include Pokémon Brilliant Diamond and Shining Pearl and Grand Theft Auto: The Trilogy - The Definitive Edition; Right now Kirby and the Forgotten Land is tied to Spring 2022, so it will be interesting to see if that goes into this financial year with a March release to help boost the numbers.

Moving on to the bottom line of Nintendo's earnings, as in the first quarter, they are well below last year's equivalents, when varying degrees of global crashes and Animal Crossing: New Horizons drove sales to a staggering level. However, as you can see from the numbers below, Nintendo is still in a strong position and making substantial profits.

• Net Sales - 624.2 billion Yen (approx $5.47 billion USD) - down 18.9% on previous year
• Operating Profit - 219.9 billion Yen (approx $1.93 billion USD) - down 24.5% on previous year
• Net Profit - 171.8 billion Yen (approx $1.5 billion USD) - down 19.4% on previous year

Although the earnings are substantial, Nintendo has been under pressure from some shareholders due to those year-on-year drops. The focus will be on the next financial year, no doubt, to start generating increases once again.

Meanwhile, however, Nintendo is financially extremely stable; The question, as always, will be how you will use that wealth to maintain your strong position in the gaming market.