Outline of consolidated financial results for the three months ended June 30, 2011 and modified consolidated earnings forecast for the fiscal year ending March 31, 2012.
Outline | Remarks by the President | Q & A
Yoshihiro Mori, Senior Managing Director, Nintendo Co., Ltd.
This outline is based on the documents "Earnings Releases," "Supplementary Information about Earnings Releases" for the 1st quarter of the fiscal year ending March 31, 2012, "Notice of Financial Forecast and Dividend Forecast Modifications" and "Notice of Nintendo 3DS Markdown."
- 1. Briefing of consolidated financial results for the three months ended June 30, 2011
- * Comparison with the same period of the previous fiscal year.
Consolidated operating results for the three months ended June 30, 2011 are as follows;
* Percentages indicate the changes from the same period of the previous fiscal year.Net Sales: 93.9 billion yen -50.2%* Gross Profit: 11.0 billion yen -84.3%* Operating Income: -37.7 billion yen - Ordinary Income: -42.5 billion yen - Net Income: -25.5 billion yen -
(Main reasons for the decrease in net sales)
The unit sales of both hardware and software of all game systems were down due to a lack of hit software titles in this June quarter. In addition, there were a few other factors which led to the decline in sales; price reductions of "Wii" hardware in the U.S., Europe and Australia, and of "Nintendo DS" hardware in the U.S. and Australia during this June quarter, the impact of absorbing the inventory markdown taken into account in connection with the price reduction of "Nintendo 3DS" hardware scheduled during the September quarter, and the stronger yen against the U.S. dollar compared to the June quarter of the previous fiscal year.
(Main reasons for the decrease in gross profit ratio)
Gross profit ratio was 11.7%, a drastic drop year-on-year. The main reasons were price reductions for "Wii" and "Nintendo DS" hardware, and a declining sales ratio of "Wii" first-party software, which has a relatively high margin over the total sales, "Nintendo 3DS," which has shown low profitability due to the fact that it was launched some months ago, as well as the impact resulting from substantially lowering the "Nintendo 3DS" hardware price.
(Main reasons for operating losses)
Operating losses arose from a sizable drop of gross profits along with a decrease in sales and gross profit ratio, and a rise of the total of selling, general and administrative expenses year-on-year. Advertising expenses were spent to spread "Nintendo 3DS" strongly throughout the markets, and research and development expenses were incurred related to development activities for products like "Wii U" that will be released in 2012.
(Main reasons for ordinary losses)
Ordinary losses stemmed from five billion yen of foreign exchange losses as well as operating losses. - 2. Briefing of consolidated earnings forecast modifications for the fiscal year ending March 31, 2012
- Consolidated earnings forecasts for the fiscal year ending March 31, 2012 and the six months ending September 30, 2011 have been revised from those announced in earnings releases for the fiscal year ended March 31, 2011, which were released on April 25, 2011.
Six months ending September 30, 2011Original Forecast Revised Forecast Net Sales: 360 billion yen 240 billion yen Operating Income: 20 billion yen -50 billion yen Ordinary Income: 30 billion yen -55 billion yen Net Income: 18 billion yen -35 billion yen Full year ending March 31, 2012Original Forecast Revised Forecast Net Sales: 1,100 billion yen 900 billion yen Operating Income: 175 billion yen 35 billion yen Ordinary Income: 185 billion yen 35 billion yen Net Income: 110 billion yen 20 billion yen
Foreign exchange rate assumptions at the end of this fiscal year have been revised from 83 yen to 80 yen per U.S. dollar and from 120 yen to 115 yen per Euro.
Consolidated forecasted unit sales for the full fiscal year ending March 31, 2012 have been modified as follows;
(Forecasted unit sales for "Nintendo 3DS" hardware have not been changed.)
* Software unit sales in the original forecast did not include the quantity bundled with hardware, but those in the revised forecast include about 2 million units of software bundled with hardware sold in this June quarter.Original Forecast Revised Forecast Wii Hardware 13 million units 12 million units Wii Software * 120 million units 110 million units Nintendo DS Hardware 11 million units 9 million units Nintendo DS Software 67 million units 65 million units Nintendo 3DS Hardware 16 million units 16 million units Nintendo 3DS Software 62 million units 70 million units The earnings forecast has been modified to reflect a trend of stronger-than-expected yen appreciation, the decided price reduction of "Nintendo 3DS" hardware, and sales performance in the June quarter and sales outlook for this holiday season.Since our dividend policy is based on profit levels achieved in each fiscal period, there will be regrettably no dividend per share for the end of the 2nd quarter, and 100 yen for the year-end and annual dividends for the fiscal year ending March 31, 2012 if the actual consolidated financial results are in line with our modified forecasts above.
Forecasts referred to above are based upon management's assumptions with information available at the time the announcement was made and, therefore, involve known and unknown risks and uncertainties. Please note that such risks and uncertainties may cause actual results to be materially different from the forecasts (earnings forecast, dividend forecast and other forecasts).
Outline | Remarks by the President | Q & A
