Nintendo hikes Switch sales forecast, reports profit at decade high

OSAKA (Reuters) - Nintendo Co Ltd 7974.T on Thursday raised the full-year sales forecast for its hit Switch console, after posting its highest quarterly profit in 10 years on strong demand for the device over the year-end shopping season.

FILE PHOTO: The Nintendo logo is displayed at a Nintendo store during a press preview in Tokyo, Japan November 19, 2019. REUTERS/Issei Kato

Nintendo raised its Switch sales forecast for the year ending March 31 to 19.5 million units from 18 million units in a previous estimate, and hiked its operating profit forecast by 15% to 300 billion yen.

Operating profit for the October-December quarter rose 6% to 168.7 billion yen ($1.54 billion), versus 158.6 billion yen a year earlier.

The quarterly profit was its highest since the same period of 2009, but still came in below an average forecast of 175 billion yen from 10 analyst estimates compiled by Refinitiv.

The Kyoto-based gaming company sold 12.6 million units of its hybrid home-portable Switch device in the nine months to December and 5.2 million handheld-only Switch Lite units that went on sale in September.

Nintendo's release of the lower-priced Switch Lite handheld and two new Pokemon titles - the console's fastest-selling game series - have helped drive momentum in the device's third year as hardware from rivals Sony 6758.T and Microsoft MSFT.O approaches the end of its lifecycle.

Gaming fans have growing opportunities to experience Nintendo’s popular roster of characters, from a branded store in Tokyo that has seen long queues, to a Nintendo-themed area due to open in Osaka’s Universal Studios Japan park this summer.

Nintendo is pushing into mobile gaming with its latest title, a version of its marquee racing series Mario Kart, which was widely downloaded but disappointed fans with its lack of a multiplayer option that is now undergoing testing.

Revenues from mobile have topped $1 billion, analytics firm Sensor Tower estimates, with Nintendo’s home market of Japan and role-playing title Fire Emblem Heroes the biggest drivers.

The company's expansion includes the start of Switch sales in China in December with partner Tencent Holdings Ltd 0700.HK as it tries to shut down a gray market for its products.

With its family-friendly games, Nintendo is seen as having a better chance of receiving approval for its titles from China’s regulators.

Production in China is seeing some impact from the coronavirus epidemic that has hit the country, CEO Shuntaro Furukawa said at a news briefing.

Nintendo's shares closed down 1% ahead of the earnings, with the benchmark index .N225 down almost 2%. Its shares are down 4% this year, having climbed 50% last year.

Reporting by Sam Nussey; Editing by Muralikumar Anantharaman and Tom Hogue