Nintendo Increases H1 Net Profit Forecast + Revolution After April News

Largely the result of a weak yen against the dollar, Nintendo today announced a significant increase to its net profit forecast for the first half but lowered its operating profit and sales due to slumping sales of the GameCube.

Originally predicting net profit of 19 billion yen Nintendo has raised this to 36 billion yen, whilst increasing current profit to 56 billion yen from 33 billion yen. As a result of a much weaker-then-expected yen in the foreign market, the Japanese giant expects to book special gains of 24 billion yen on foreign currency-dominated assets.

Assuming the dollar to be worth 107 yen and the euro 135 yen earlier in the year, at the end of September the dollar was worth 113.19 yen and the euro stood at 136.13 yen. Nintendo benefits from this because it re-evaluates its uncovered foreign currency-dominated assets based on the exchange rate at the end of the fiscal year. At the beginning of the fiscal year Nintendo had US dollar dominated assets worth $5.2 billion and euro-dominated assets valued at 400 million euros.

Conversely lower-than-expected sales of the GameCube and software forced Nintendo to decrease its first half operating profit forecast from 30 billion yen to 20 billion yen, whilst dropping revenue during the same period from 190 billion yen to 175 billion yen.

For the full year forecast ending March 31st 2006 Nintendo is lowering its operating profit forecast from 115 billion yen to 90 billion yen, whilst slashing its sales projections to 500 billion yen from 520 billion yen.

Revealingly the financial forecast running up to March 31st 2006 makes no mention of Revolution console sales, strongly suggesting that Nintendoâ??s next-gen console wonâ??t even arrive in Japan before April 2006.