$388 million yen exchange rate gain boosted Nintendo (NTDOY) Q1 2023 ordinary profit

Nintendo just released its Q1 2023 earnings results. Please take a look.


Nintendo has released its Q1 fiscal year 2023 earnings results and the company has reported an expected decrease in sales and operating profit, but a $388 million (51.7 billion yen) boost from favorable foreign exchange rates lead to 29.6% operating profit growth from 2022.

It's important to note that foreign exchange gains did not help Nintendo's overall sales which were down 4.7% from Q1 2022. Operating profit and net sales for Q1 2023 missed analyst estimates.

Nintendo operating profit table for Q1 2023.
Nintendo's first quarter of fiscal year 2023 is off to a rough start with net sales and operating profit decreasing from 2022.
Source: Image: Nintendo Investor Relations

Nintendo did benefit greatly from the weak yen with a $388 million dollar foreign exchange gain. That is a 6907.5% jump from the prior year.

Nintendo table breaking down year-over-year growth in non-operating income.
Foreign exchange gains grew 6907.5% from the prior year.
Source: Image: Nintendo Investor Relations

Nintendo had this to say about the yen's effect on ordinary profit:

Ordinary profit rose by 29.6% year-on-year to 166.7 billion yen, due in part to foreign exchange gains of 51.7 billion yen on the yen's depreciation at the end of this first quarter compared to the end of last fiscal year, and such factors as an increase in interest income.

Interestingly enough, Nintendo did not change its yen foreign exchange rate assumptions for fiscal year 2023 despite the yen's weakness. The company also maintained its full year sales and profit guidance provided last quarter. Despite the dollar yen exchange rate currently sitting at 133 yen/dollar, Nintendo still assumes the yen will average 115 yen/dollar for fiscal 2023, which seems pretty darn optimistic. The Big N also left its euro exchange rate assumptions unchanged.

Foreign exchange rate assumptions table from Nintendo Q1 2023 earnings release.
Nintendo did not change their full year assumptions for the yen.
Source: Image: Nintendo Investor Relations

While Q1 2023 was not Nintendo's strongest quarter, the Switch console's life cycle is still going strong with over 111 million units sold. Nintendo did caution that chip procurement is still a supply chain constraint, but guidance for fiscal year 2023 hardware and software sales remain unchanged from the Q4 2022 report. Nintendo will have to sell an additional 17.6 million Switch console units to hit its 21 million target. Despite a slow start to Switch production, Nintendo believes the company will be able to catch up by the fall for another holiday push.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long Nintendo via NTDOY shares


Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

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