Nintendo Clocks 6% Net Sales Decline For Nine-Month Period

Nintendo Co Ltd NTDOY reported a net sales decline of 6% year-on-year to ¥1.32 trillion for the nine months ended December 31, 2021. Dedicated video game platform sales declined 6.1% Y/Y to ¥1.28 trillion. Mobile, IP-related income sales reduced 5.2% Y/Y to ¥39.8 billion. Playing cards, etc., sales rose 57.8% Y/Y to ¥2.1 billion.
Hardware: Unit sales for the entire Nintendo Switch family of systems declined by 21.4% Y/Y to 18.95 million units. Nintendo Switch sales decreased 29.7% Y/Y to 11.79 million units. Nintendo Switch Lite sales reduced 56.8% Y/Y to 3.17 million units.
Software: Software sales rose 1.8% Y/Y to 179.29 million units. Digital sales declined 0.4% Y/Y to ¥255 billion.
Profit: The gross profit decreased 4.5% Y/Y to ¥734 billion due to a decline in net sales. The gross margin expanded by 90 bps to 55.6% due to the weak yen's exchange rate effect.
The operating profit declined 9.3% Y/Y to ¥472.5 billion due to the gross profit decline and higher SG&A. The operating margin contracted 130 bps to 35.8%.
The net profit reduced 2.5% Y/Y to ¥367.3 billion, and the net margin expanded 100 bps to 27.8%.
Outlook: Nintendo raised its FY22 guidance of net sales of ¥1.65 trillion from ¥1.6 trillion, representing a 6.2% Y/Y decline.
It sees FY22 Nintendo Switch Hardware of 23 million units (prior view 24 million units). It considers a Nintendo Switch Software of 220 million units (prior view 200 million units).
The videogame maker raised the FY22 operating profit outlook to ¥560 billion from ¥520 billion, implying a 12.6% Y/Y decline and a net profit to ¥400 billion from ¥350 billion, signifying a 16.7% Y/Y decrease.
Dividend: Nintendo sees the FY22 dividend of ¥1,700 (prior view ¥1,490) versus the prior-year dividend of ¥2,220. It held ¥1.1 trillion in cash and equivalents.
Price Action: NTDOY closed higher by 1.15% at $62.66 on Wednesday.

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