Nintendo lowers annual profit forecast as supply shortages hit Switch sales

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Nintendo lowers annual profit forecast as supply shortages hit Switch sales
Credit: © Reuters.

By Scott Kanowsky -- Nintendo Co Ltd (TYO: 7974 ) has lowered its annual income forecast after chip shortages led to a decline in hardware and software sales in its latest nine-month period.

In a statement, the Japanese video game maker said it expects operating profit for the financial year ending on March 31 to come in at ¥480 billion ($1 = ¥132.19), down from its prior guidance of ¥500B. Net sales are also predicted to be ¥1.6 trillion, below its previous outlook of ¥1.65T.

Analysts had penciled in operating income of ¥580.56B on sales of ¥1.72T.

The downgraded estimates come after sales of Nintendo's key Switch consoles declined by 21.3% year-on-year to 14.91 million during the nine months ended on December 31, mainly due to supply chain constraints late last summer that caused a drawdown in the availability semiconductors and other key components. Total software sales dipped as well by 4% to 172.11M units.

Meanwhile, demand for the Switch was also weaker than expected during the holiday shopping season, driving a decrease in third-quarter operating income to ¥190.15B, missing estimates. As a result, the yearly sales forecast for the Switch was brought down to 18M units from 19M.

But Nintendo President Shuntaro Furukawa has claimed that supply chain shortages are beginning to show signs of abating, while demand for the Switch remains strong.

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