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Capcom halves annual profit forecast

Guidance cut following weaker than expected performance of mobile business

Capcom has more than halved its annual net profit forecast, primarily citing the weaker than expected performance of its mobile contents business.

Also contributing to the Japanese publisher's downwardly revised guidance is a newly announced "special loss" of approximately five billion yen (£29.2m/$48.6m), which was categorised as "business structural improvement expenses".

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For the business year ending March 31, Capcom has reduced its net profit forecast from 6.8 billion yen (£39.8m/$66.1m) to 3.3 billion yen (£19.3m/$32.1m). The revised figure is slightly greater than the 2.97 billion yen (£17.4m/$28.9m) net profit the company made in the previous fiscal year.

Capcom told investors: "Due to rapid changes taking place in the market for games, Capcom is building a sound base for earnings by reorganising the product development framework and improving development processes.

"These are two core elements of the company's operations. The objective of these activities is to earn consistent earnings in each fiscal year. However, these initiatives have not yet started to produce benefits mainly in the Mobile Contents.

"As a result, Capcom has decided to post business structural improvement expenses of approximately 5,000 million yen in consolidated, and approximately 4,300 million yen in non-consolidated forecast, following a comprehensive examination of prospects for recovering the cost of certain fixed assets."

Capcom did upwardly revise its annual sales guidance, from 97 billion yen (£567m/$943m) to 101.5 billion yen (£593m/$987m), citing "strong sales" of 3DS game Monster Hunter 4 and the pachislo title Monster Hunter Gekka Raimei.

"On the other hand, the operating income and ordinary income forecasts have been lowered because of a decline in profitability," the firm said. "The primary reasons for this decline are below expectations of products in the highly profitable mobile contents and Monster Hunter Frontier G online game. The net income forecast has been lowered for these reasons as well as to incorporate the special loss explained in the previous section."

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