Nintendo’s third quarter financial results
1. Briefing of consolidated financial results for the nine months ended December 31, 2011
* Comparison with the same period of the previous fiscal year
A. Consolidated operating results for the nine months ended December 31, 2011
* Percentages indicate the changes from the same period of the previous fiscal year.
Net Sales: 556.1 billion yen -31.2%*
Gross Profit: 131.1 billion yen -59.1%*
Operating Income: -16.4 billion yen –
Ordinary Income: -66.0 billion yen –
Net Income: -48.3 billion yen –
(Main reasons for the decrease in net sales)
The net sales were down due to a decrease in the unit sales of the “Wii” and “Nintendo DS” hardware and software around the world, though the sales units of the “Nintendo 3DS” improved as a result of the hardware price reduction implemented last August and hit software titles released in the last holiday season. In addition, there were a few other factors which led to the decline of sales; the effect of the price reductions of hardware systems, the impact of absorbing the inventory markdown taken into account in connection with the price reductions, and the stronger yen against the average exchange rates of the U.S. dollar and Euro, which were used to convert the sales in foreign currencies to those in yen, compared to the same period of the previous fiscal year.
(Main reasons for the decrease in gross profit ratio)
The main reasons were a decrease in the hardware profitability ratio due to the effect of the price reductions for the “Wii” and “Nintendo 3DS” hardware, and the impact of absorbing the inventory markdown taken into account in connection with the price reductions. The growth of the “Nintendo 3DS” hardware sales ratio out of the total net sales also led to the decrease in gross profit ratio because the “Nintendo 3DS” hardware was sold at a loss due to its price reduction.
(Main reasons for operating losses)
Operating losses arose from a sizable drop of gross profits along with a decrease in sales and the gross profit ratio, and a smaller reduction of the total of selling, general and administrative expenses including fixed expenses than that of gross profit.
(Main reasons for ordinary losses)
Ordinary losses stemmed from 53.7 billion yen of foreign exchange losses due to the appreciation of the yen against the U.S. dollar and Euro as well as operating losses.
B. The balance of cash and deposits on the consolidated balance sheets
As of Mar. 31, 2011 As of Dec. 31, 2011
Cash and Deposits 812.8 billion yen 566.7 billion yen
The balance of cash and deposits were lowered due to, in addition to the effect of the appreciation of the yen against the U.S. dollar and Euro, the fact that payments made for trade accounts payables, ordinary expenses, corporate income taxes and dividends surpassed money received by collections of trade accounts receivable, etc.
2. Briefing of consolidated earnings forecast modifications for the fiscal year ending March 31, 2012
Earnings forecasts for the fiscal year ending March 31, 2012 have been revised from the forecasts announced on October 27, 2011.
Full year ending March 31, 2012
Previous Forecast Revised Forecast
Net Sales 790 billion yen 660 billion yen
Operating Income 1 billion yen -45 billion yen
Ordinary Income -30 billion yen -95 billion yen
Net Income -20 billion yen -65 billion yen
The foreign exchange rate assumption as of March 31, 2012 per Euro has been revised from 106 yen to 98 yen, while that per the U.S. dollar remains at 77 yen.
Forecasted unit sales for the full fiscal year ending March 31, 2012 have been modified as follows;
(Forecasted unit sales for “Wii” software have not been changed.)
Previous Forecast Revised Forecast
Wii Hardware 12 million units 10 million units
Wii Software * 100 million units 100 million units
Nintendo DS Hardware 6 million units 5.5 million units
Nintendo DS Software 62 million units 59 million units
Nintendo 3DS Hardware 16 million units 14 million units
Nintendo 3DS Software 50 million units 38 million units
* Wii software unit sales in the revised forecast include about 10 million units of software bundled with hardware during the nine months ended December 31, 2011; however, with respect to software units bundled with hardware, those in the previous forecast included about four million units only during the six months ended September 30, 2011.
The earnings forecast has been modified to reflect the trend of stronger-than-expected yen appreciation and the sales units forecasts revised based on the current sales performance.
The annual dividend per share for the fiscal year ending March 31, 2012 is expected to be 100 yen and this is set to be the minimum dividend per share for this fiscal year, because we expect that the financial performance will be revitalized going into the fiscal year ending March 31, 2013.
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).