Currency Drives Nintendo’s Slow Return to Profit

Nintendo Wii U

Weak Yen gives turbo boost, but sales of Wii U device still slow

HONG KONG – Japanese games maker Nintendo returned to profit in the six months to September, helped by a weak Yen, which made its consoles and software cheaper overseas.

Despite that fillip, the company still struggled to sell the Wii U device profitably.

The company reported a 2% drop in net sales to JPY196 billion ($2.01 billion) in the half year to end Sept. It eked out a net profit of JPY600 million ($6.15 million), where in the same period last year it lost JPY28 billion ($287 million), but most of the boost came from exchange rate gains.

In the full year to March 2013 it similarly lost money at the operating level but was lifted by the weakening currency to net profits of JPY7.1 billion ($73 million).

Global sales of the “Wii U” hardware and software reached only 0.46 million units in the half, while related software managed 6.30 million units, helped by Nintendo’s own “Pikmin 3” title released in July in Japan and Europe, and in August in the U.S.

The company admitted that the Wii U hardware “still has a negative impact on Nintendo’s profits.” The device had to be discounted in the U.S. and Europe and related promotions increased.

The company says it will “concentrate on proactively releasing key first-party titles towards the coming year in order to regain momentum for the platform.” For the coming year-end sales season, it will release key first-party titles such as “Wii Party U” and “Super Mario 3D World,” and offer the Wii U hardware at an affordable price by bundling software with the system.

The company said that it continued to experience strong sales in the Japanese market for “Nintendo 3DS (3DS, 3DS XL and 2DS),”helped by its own “Tomodachi Collection,” which was released in April in Japan and achieved 1.63 million units. There were also hit titles from third-party publishers. Worldwide sales of its 3DS hardware and software were 0.10 million and 5.25 million units respectively.

In markets outside Japan “Animal Crossing: New Leaf,” released in June in the U.S. and Europe, sold 2.01 million units (2.49 million units worldwide), while titles such as “Luigi’s Mansion: Dark Moon,” released in the previous fiscal year, and “Mario & Luigi: Dream Team” and “Donkey Kong Country Returns 3D,” both released in the current fiscal year, showed steady sales. As a result, the global sales of the “Nintendo 3DS” hardware and software reached 3.89 million and 27.38 million units respectively.

The company said that it did not feel the need to change its full year financial guidance, issued in April at the time of its 2012-13 results statement.

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