Nintendo Make More Money From The Forex Market!

TOKYO: Japanese games console maker Nintendo Co Ltd has reported a 12.5 per cent increase in its net profit for the year ended March 2006, mostly on account of gains from foreign currency-denominated assets.

However, the company forecast a 34 per cent decline in net earnings this fiscal, as a result of the impact of the appreciation of the yen and costs on account of launching its next generation stand-alone game console, ‘Wii.’

The company said it had net profit of 98.4 billion yen, which is up from 87.4 billion yen in the previous year. Its revenue for the year fell 1.2 per cent to 509.2 billion yen. It had booked foreign exchange gains of 45.5 billion yen, based on an exchange rate of 113.1 yen to a dollar and 137.86 yen to a euro in the year under review. In the previous year, the company had foreign exchange gains of 21.8 billion yen.

At end-March 2006, the company had dollar-based assets valued at $2.9 billion and euro-denominated assets of 807 million euro.

While the company’s bottom line has improved, it said its operating profit has fallen 19 per cent to 90.3 billion yen as a result of declining global sales of its Gameboy family of portable games and Gamecube consoles. The global shipments of Gameboy Advance SP and Gameboy Micro over the year fell to 8.33 million units from 15.4 million units the year earlier, while global sales of game software for these consoles came down to 59.36 million copies from 84.57 million copies.

Similarly, shipments of Gamecube stand-alone consoles fell to 2.35 million units from 3.92 million units earlier and sales of game software for the systems coming down to 32.79 million copies from 48.42 million copies.

The company’s Nintendo DS consoles sold 11.46 million units, almost doubling the 5.27 million units recorded in the previous year.

Nintendo is coming out with its “Wii” game console later this year. The console is expected to help the company regain some of the market share it had lost to rivals like Sony Computer Entertainment Inc. and Microsoft Corp. It is aiming to sell 6 million Wii units in the year to March 2007.

The company intends to increase capital investment to 7 billion yen this year from 5.6 billion in the previous year.

Nintendo is paying 390 yen per share as dividend for the year against 270 yen per share paid last year.

Nintendo stock was down 8.3 per cent at 17,410 yen.

SOURCE: Earthtimes

JON’S COMMENT
Well, Nintendo certainly had a nice run profiting from the strengh of the Yen and it’s kind of funny to see that they have made more money this way in the past year. Maybe next year, they’ll be more lucky with their new system “Wii”. But it goes to shows that every business that imports or exports goods should have some edging plans to protect their bottom line and assets.