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Nintendo profits up over 400% as COVID-19 drives game sales

Nintendo Co. Ltd.'s profits surged more than 400% in its fiscal first quarter ended June 30, as demand for the company's Switch console and Animal Crossing video game skyrocketed amid the COVID-19 pandemic.

The Japanese video game company shipped more than 5.7 million Switch consoles in the quarter, up 166.6% year over year. The shipments included about 3 million of the original Switch device and 2.6 million units of the portable-only Switch Lite model. As of June 30, lifetime-to-date sales of the Switch consoles reached 61.44 million units worldwide.

Demand for the Switch reached a record high in the wake of stay-at-home orders due to the pandemic, which also caused Nintendo to run into supply issues with the console due to factory shutdowns in China. Those closures triggered component shortages and slowed output for factories in Vietnam where the Switch is manufactured. As of Aug. 6, there is still a shortage of both versions of the Switch at major retailers around the globe.

"COVID-19 created some difficulties in procuring the parts required for manufacturing Nintendo Switch consoles, but the overall production situation has almost recovered," Nintendo said in a statement.

When contacted by S&P Global Market Intelligence, a Nintendo spokesperson declined to comment when retailers would start receiving new shipments of the consoles.

The primary driver for Switch hardware purchases was Animal Crossing: New Horizons, the social simulation video game that sold 10.6 million units in the quarter to reach 22.4 million lifetime sales.

SNL ImageNintendo's Animal Crossing: New Horizons video game for the Switch sold 10.6 million copies in the June quarter to reach 22.4 million lifetime sales.
Source: Nintendo

"Sales of this title continue to be strong with no loss in momentum, contributing greatly to the overall growth in software sales," the company said. "In addition, sales of titles from other software publishers continued to grow steadily, bringing the total number of million-seller titles during this period to nine, including titles from other software publishers."

Titles released during the second quarter that crossed 1 million unit sales included Xenoblade Chronicles Definitive Edition, which launched in May and reached 1.3 million sales, and Clubhouse Games: 51 Worldwide Classics, which launched in June and reached 1.03 million units.

Quarterly operating profit totaled ¥144.74 billion, up 427.7% year over year from ¥27.43 billion a year ago. Profit attributable to owners of the parent rose 541.3% to ¥106.48 billion. Net sales for the period reached ¥358.11 billion, up 108.1% year over year.

There was no change in Nintendo's financial forecast for the fiscal year ended March 2021. The company continues to expect net sales of ¥1.2 trillion, operating profit of ¥300 billion and profit attributable to owners of the parent of ¥200 billion. Sales expectations for the year remained the same as well, with the company still expecting 19 million Switch console shipments and 140 million software unit shipments.

As of Aug. 5, US$1 was equivalent to ¥105.44.