Nintendo sees best profits for nine years

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Nintendo has seen its best annual profits in almost a decade, the company announced on Thursday.

Having seen a troubled few years at the beginning of the decade with the critical and commercial failure of the Wii U video gaming console, the iconic Japanese gaming brand bounced back in 2017 with the Switch. The handheld-cum-home console has been a significant contributing factor towards the announcement that Nintendo expects operating profit to rise 26.7 per cent in the year through March to a nine-year high.

The initial success of the hybrid home-portable Switch has boosted Nintendo’s gaming software sales and encouraged more third-party publishers to make games for the console, a cycle which could further push up console sales.

The Kyoto-based company also said it named managing executive officer Shuntaro Furukawa as its new president to succeed Tatsumi Kimishima, effective after the general shareholders meeting in June.

Kimishima, a former banker who succeeded charismatic leader Satoru Iwata following the latter's death in July 2015, said that he decided to step down as he has “fulfilled almost fully his responsibilities” to turn around the company.

Nintendo estimated profit to reach 225 billion yen (£1.48 billion) from 177.56 billion yen (£1.17 billion) a year prior. If achieved, it would be Nintendo’s highest operating profit since the year ended March 2010.

Nintendo is aiming to sell 20 million Switch consoles in the financial year started April, confirming its previous forecast made in January. 

Sales of the console reached 15 million units in the year ended March, bringing the cumulative total to 17.8 units since its global release in March least year.

The strong sales has fuelled hopes that the Switch could repeat the success of the first Wii console (which sold over 100 million units between late 2006 and March 2009), leading to a doubling of Nintendo’s stock price to nine-year highs earlier this year.

Nintendo is also hoping that the Switch can have a further application outside of gaming with the launch of Labo – the cardboard LEGO-style build-it-yourself set of accessories which analysts have said is a new way of attracting younger audiences.

Mizuho Securities senior analyst Takeshi Koyama said in a report to clients this month that Labo boosts “potential for greater penetration of the Switch”. Its wide-ranging appeal is attracting families normally reluctant to buy their children console gaming systems, he said.

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