Nintendo COVID-19 financial risks plans

2020 has been a strange year and it’s only May. While Nintendo is getting started on their 2021 financial year, it’s doing so in the midst of one of the greatest global crises of our generation. Like everyone else, companies are making plans and hoping for the best. However, when it comes to corporations, investors like to know that there’s a realistic plan in place. In its financial report, Nintendo discusses what possible risks the COVID-19 crisis presents to the company while also talking about the plans they have in place to mitigate revenue loss.

Nintendo COVID-19 risks and plans

While the global pandemic is referenced throughout Nintendo’s releases, there are two sections of the consolidated financial statements document dedicated specifically to COVID-19. The first has to do with risks. While the delays in production and shipping around the world are decreasing, they can’t take for granted that these issues won’t crop up again. Likewise, getting finished products to retailers and customers has been tricky to say the least, and it may come to the point where they can’t sell their product in certain markets. Research and development is also looking at some major disruptions, with adjustments to workflow making it hard to predict when certain milestones can be met. Finally, the report mentions exchange rate fluctuations, as everything can change significantly in value depending on how individual countries’ economies weather the storm.

The second section talks about the outlook for the current fiscal year (FY21). It starts off with a grave statement: “There are concerns that COVID-19 will lead to a global decline in production and consumption.” However, Nintendo outlines its plans for the year and talks about anticipated successes. It’s currently looking at the releases of Xenoblade Definitive Edition in May and Clubhouse Games: 51 Worldwide Classics in June as the big releases in the immediate future. The Pokémon Sword and Shield DLC packs are being touted as reliable money makers coming up soon, as well. The report also states that Nintendo’s first-party offerings, new third-party games, the continuing sales of existing titles, and mobile revenue will be able to “invigorate the platform.”

Despite the uncertainty, Nintendo has high hopes for this year and projects 300 billion yen (about $2.8B as of May 7, 2020) in operating profit for FY21. Considering how well FY20 went for the Big N, it’s certainly possible, COVID-19 or not. After all, when many of us are stuck inside, we turn to video games to get us through.

[Source]

Dominick Ashtear

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