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Nintendo Reports Sharp Profit Drop, Cuts Outlook for Sales

Nintendo Co., Ltd. has reported a significant decline in profit and sales for the first half of the fiscal year. While the company maintained its outlook for net earnings, it has lowered its forecasts for operating income and net sales, leading to a drop in stock price.

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AI Rating:   4

Nintendo Co., Ltd. has shared concerning financial results, indicating a downward trend that can negatively impact its stock price. Key points from the report include:

  • Net Income: Profit attributable to shareholders plummeted by 60% to 108.66 billion Japanese yen compared to 271.30 billion yen from the previous year. This drastic decrease signals a challenging period for the company, which is likely to affect investor confidence.
  • Earnings Per Share (EPS): The profit per share dropped significantly to 93.33 yen from 233.03 yen a year ago. A lower EPS typically reflects a struggling company, influencing stock prices as investors may seek alternatives.
  • Operating Income: Operating profit fell by 56.6% to 121.51 billion yen, further indicating operational struggles. This decline suggests weakened operational efficiency, which could deter investor interest.
  • Revenue Growth: Net sales decreased by 34.3% to 523.30 billion yen from last year's 796.24 billion yen, demonstrating a significant decline in revenue generation capability. This drop is alarming as it suggests decreasing market demand.
  • Digital Sales: Digital sales, which decreased by 26.5%, highlight a potential area of concern, especially with declining sales of popular Nintendo Switch downloadable software versions.

Looking forward, Nintendo projects a decline in net profit of 38.9% for the fiscal year ending March 31, 2025, and has increased its expectations for the drop in operating profit and sales. With a trimmed forecast for both operating income (now expected to drop by 31.9%) and net sales (expected to decline by 23.4%), investor sentiment may further sour.

The interim dividend was also cut from last year’s 80 yen to 35 yen, which might signal to investors the company’s efforts to conserve cash amidst declining profits.

Stocks:  NTDOY