Squenix forecast remains unchanged despite lower profits

Japanese publisher Square-Enix has released a new financial report for the nine month period ending December 31 2005, revealing that profits and operating income fell despite an increase in sales.

The report, which was partially translated by US website GameSpot, stated that net sales rose by just over 13 per cent to YEN 68.9 billion (USD 585 million). Operating income, however, was posted at YEN 6.33 billion (USD 53.8 million) - a drop of 75.5 per cent - and net profit was down 67.7 per cent to YEN 4.29 billion (USD 36.5 million).

Square-Enix published several successful software titles during the period - more than 1 million copies of Kingdom Hearts II have been sold in Japan since the game went on sale in December, and Dragon Quest VIII proved to be a hit with US gamers. In addition, around 450,000 copies of PS2 title Romancing SaGa were shifted in Japan, with a further 50,000 sold in North America.

But despite healthy game sales, Square-Enix could not match up to 2004 profits, which were boosted by the Japanese release of Dragon Quest VIII- an astonishing 3 million copies of the RPG were sold in the the first three days after launch.

Squenix's book and comic publishing arm saw a fall in income of 23.7 per cent YEN 1.85 billion (USD 15.7 million), and sales were down 9.5 per cent. Income was also down for the company's mobile content division, standing at YEN 736 million (USD 6.27 million) despite a 17.5 per cent increase in sales.

Following the release of CGI movie Final Fantasy VII: Advent Children on DVD and UMD, the company's miscellaneous operations division saw a 209.8 per cent increase in sales and a 250 per cent income rise to 2.15 billion yen (USD 18.3 million).

The report also disclosed fourth quarter results for recently acquired subsidiary Taito - listed in the report as Squenix's "Amusement Machine" arm - with three month sales standing at YEN 20.9 billion (USD 178 million). The company made an operating loss of YEN 234 million (USD 1.99 million).

Square-Enix has not made any revisions to its financial forecast as a result of the report - year-end sales are still predicted to stand at YEN 136 billion (USD 1.15 billion), while operating income is forecast at YEN 28.5 billion (USD 242 million) and profits at YEN 17.5 billion (USD 149 million).

Key forthcoming releases for the company include Final Fantasy XII, set to hit Japanese shelves in March, and the US and European launches of Advent Children and Kingdom Hearts II.