Nintendo Raises Net Profit Forecast By 17 Percent

Japanese videogame maker Nintendo Co. Ltd. on Wednesday raised its net profit forecast by 17 percent on foreign exchange gains and said it would pay a record 270 yen dividend for the year just ended.

Nintendo, known for game characters such as Mario, Donkey Kong and Pokemon, said it nearly doubled its dividend payment because it now expected to post a net profit of 82 billion yen ($757.4 million) in the year ended in March, compared with its previous forecast of 70 billion yen.

Analysts’ on average expect the company to report a net profit of 72.4 billion yen, according to a poll of 16 analysts by Reuters Estimates.

Nintendo had said it aimed to achieve a dividend payout ratio of 50 percent based on its group net profit.

The company, which paid an interim dividend of 70 yen, had previously said it would pay a dividend of between 140 and 270 yen a share for the last business year, compared with 140 yen in the previous year.

Nintendo joins a growing list of firms in Japan raising their dividend as they make greater efforts to become shareholder friendly in the face of growing investor awareness and activism.

Companies are also hoping higher dividend payments will increase share prices, thereby discouraging hostile takeovers in the wake of Internet services firm Livedoor Co.’s highly publicised battle for television broadcaster Nippon Broadcasting System Inc.

Nintendo’s latest forecast gives it a dividend yield of 2.2 percent, higher than Sony Corp.’s expected 0.6 percent and Microsoft Corp.’s expected 1.3 percent yield. Sony and Microsoft both make game products that compete with Nintendo’s GameCube consoles and DS portable machines.

Dividend yields in Japan are among the lowest in Asia.

The average dividend yield for some 1,600 firms listed on the Tokyo bourse’s first section was 1.17 percent, while the average for component companies of Standard & Poor’s 500 Index stood at 2 percent.

The game console maker, which held 780 billion yen in cash and deposits as of December, said it generated foreign exchange gains on dollar-denominated assets in the 2004/05 year due to the yen’s fall against the dollar.

Nintendo had earlier assumed a dollar-yen rate of 105 yen for the end of March, but the actual rate was about 107 yen , lifting the value of its dollar assets. Nintendo said its overall foreign exchange gains topped 20 billion yen.

It raised its recurring profit forecast for the last business year to 140 billion yen, compared with its previous forecast of 120 billion yen.

Nintendo has seen brisk sales of its newest DS portable device, but it slashed its operating profit forecast in January due to slower-than-expected sales of DS software and lacklustre demand for its GameCube consoles.

Source: Reuters