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Nintendo's profits jump 41% in FY'20 as Switch sales soar amid COVID-19

Nintendo Co. Ltd.'s profits surged in its fiscal year ended March 31, driven by high demand for its Switch console and a new key title release during the coronavirus pandemic.

The Japanese video game company shipped just over 21 million Switch consoles in fiscal 2020, handily beating its forecast of 18 million shipments and marking a 24% increase year on year. The shipments included about 14.8 million units of the original Switch device and 6.19 million units of the portable-only Switch Lite model. Lifetime-to-date sales of the Switch are now at about 55.8 million units worldwide.

Demand for the Switch skyrocketed in the wake of stay-at-home orders due to the pandemic and the March 20 launch of "Animal Crossing: New Horizons." Nintendo said the game sold more than 13 million copies in its first six weeks of release, making it the fastest-selling title for the console.

SNL ImageNintendo's "Animal Crossing: New Horizons" sold more than 13 million copies in its first six weeks of release.
Source: Nintendo

Nintendo ran into supply issues with the console due to factory shutdowns in China, which caused component shortages and slowed output for factories in Vietnam where the Switch is manufactured. The company was forced to briefly suspend the console's shipments to Japan in April. As of May 7, the console is still sold out at most major retailers across the globe.

"It appears that delays in production and shipping are gradually recovering," the company said in its earnings release. "However, we may be affected if there continue to be issues involving the procurement of necessary components. In addition, if the impact of COVID-19 is prolonged or worsens further, it may disrupt the product supply."

Nintendo's fiscal 2020 operating profit totaled ¥352.37 billion, up 41.1% year over year from ¥249.7 billion in fiscal 2019. Profit attributable to owners of the parent rose 33.3% to ¥258.64 billion. Net sales for the period came to about ¥1.31 trillion.

Looking ahead to the fiscal year ending March 31, 2021, Nintendo expects net sales of ¥1.2 trillion, operating profit of ¥300 billion and profit attributable to owners of the parent of ¥200 billion. The company also forecast 19 million Switch console shipments and 140 million software unit shipments in the year.

Nintendo cautioned that development schedules of its new games may be impacted by the pandemic.

"The impact to overseas subsidiaries and other affiliated companies involved in development is anticipated to be even more difficult to predict than within Japan," the company said. "As a result of these factors, we may not be able to proceed with the release of Nintendo products and the start of services as planned."

As of May 6, US$1 was equivalent to ¥106.05.