Capcom reports full-year losses, blames poor performance outside Japan

Publisher Capcom has announced a net loss for the second year in succession, with declining sales and operating profits blamed on weak performance of key products in North America and Europe.

The company announced a net loss of 9.16 billion Yen (67.7 million Euro) for the year, which, although sizeable, is still less than half the size of the loss posted in the previous year.

The firm's underlying figures saw global sales dropping by 15 per cent to 52.7 billion Yen (389 million Euro), while operating profit fell by a massive 79 per cent to 1.4 billion Yen (10 million Euro).

Performance in North America and Europe was certainly weak throughout the year. Sales in North America dropped by over 50 per cent, with titles such as Dino Crisis 3 and Viewtiful Joe failing to live up to expectations, and Capcom USA ended up posting a 4.6 billion Yen (34 million Euro) operating loss.

Europe underperformed to a lesser degree; sales in the region fell by almost 35 per cent, but the company still posted a 330 million Yen (2.4 million Euro) operating profit for this territory, which is down 50 per cent on last year's figure. Once again, Dino Crisis 3 and Viewtiful Joe underperformed, as did Chaos Legion.

Capcom's Japanese operations posted a profit of some 8 billion Yen (59 million Euro), with strong performance in the console game sector (including a surprisingly good showing for Grand Theft Auto III, which the company published in japan under license) as well as good growth in the arcade sector.

Much of the company's net loss can be attributed to restructuring of its gaming operations - most recently seen in the closure of certain studios and the formation of the new wholly owned Clover Studio subsidiary. Along with unrecoverable liabilities from Capcom's banking operation, these restructuring costs knocked 7.7 billion Yen (57 million Euro) off the company's bottom line.

After two years in the red, however, Capcom expects a return to profitability in the coming year. The company is currently projecting sales of 65.5 billion Yen (484 million Euro) for the year, and net profits of 3.9 billion Yen (28.8 million Euro). As well as expansion onto the Nintendo DS and Sony PSP platforms, the firm expects to see benefits from moves into the online gaming and mobile gaming markets.