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Capcom Posts 73 Percent Profit Drop Amid Major Delays, Weak Sales

Osaka, Japan-based Capcom reported a 73 percent drop in annual profits, and a 27 percent drop in sales, as weak sales of new games and delays of major titles impacted results.
Capcom on Friday reported "sluggish" financial results for fiscal year 2009 ended March 31, 2010, as the company cited delays of major titles into the current fiscal year and weak sales of new titles. The company's decision to delay Lost Planet 2, Super Street Fighter IV and the overseas release of Monster Hunter Tri into fiscal 2010 drove annual sales down 27 percent year-on-year to ¥66.8 billion ($728.1 million). Capcom also said that new titles Resident Evil: Darkside Chronicles for Wii, and Bionic Commando and Dark Void for Xbox 360 and PlayStation 3 "underperformed" during the year, leading to the sales decline. Amid the sales slump, net income dropped 73 percent to ¥2.2 billion ($23.6 million). But Capcom said that sales of Resident Evil 5 and the original Street Fighter IV, both released in the prior fiscal year, achieved "healthy growth" in overseas markets. New games Monster Hunter Tri and Monster Hunter Freedom Unite also saw strong growth in Japan. The company also said that the Nintendo DS game Ace Attorney Investigations: Miles Edgeworth and the Xbox 360 and PS3 game Resident Evil 5: Alternative Edition "performed satisfactorily." In Capcom's home video games segment specifically, the company recorded a 30 percent drop in sales to ¥44 billion ($479.2 million). Operating income in the segment dropped 52 percent to ¥7.8 billion ($85.4 million). In its arcade segment -- which includes the operation of arcades, not the sales of arcade machines -- the company reported an 11.3 percent drop in sales for the year to ¥12 billion ($130.9 million). Operating income rose 162.9 percent to ¥509 million ($5.6 million). Capcom said that it closed down two unprofitable arcades during the year, and had 38 arcades at the end of the year. Capcom said that arcades are a "slowly recovering market." However, Capcom said that it "struggled" in the arcade game sales segment, with the company calling it a "stagnating market." Sales in the segment were down 71 percent to ¥2.3 billion ($24.8 million). Operating loss for the year was ¥203 million ($2.2 million), compared to operating income of ¥1.8 billion ($19.2 million) a year ago. With major games now in the current fiscal year, Capcom said that it expects a "sharp rebound." The publisher forecast sales for the fiscal year ending March 2011 to rise 42 percent to ¥95 billion ($1 billion), and net income to increase 269 percent to ¥8 billion ($87.3 million).

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