Nintendo Promises 10% Pay Hike Even as It Trims Profit Outlook

Reuters

20:15 JST, February 7, 2023

TOKYO (Reuters) — Japanese video game maker Nintendo Co Ltd said on Tuesday it plans to lift workers’ base pay by 10% even though a firmer yen forced it to trim its full-year profit forecast.

The hefty pay hike comes amid calls by Prime Minister Fumio Kishida for Japanese companies to pay workers more as inflation takes hold in an economy used to years of deflation and stagnant wages, and as Japan prepares for its annual spring round of labor negotiations.

Fast Retailing Co Ltd, the parent of the Uniqlo clothing chain, was one of the first companies off the blocks, jolting Japan Inc when it said last month it would hike wages by as much as 40%.

“It’s important for our long-term growth to secure our workforce,” Nintendo President Shuntaro Furukawa told an earnings briefing.

For companies that can afford to do so, higher salaries may also help them attract talent as a falling birth rate and low immigration leave Japan with serious labor shortages.

The creator of “Super Mario Bros” and “Legend of Zelda” cut its operating profit 4% to 480 billion yen ($3.6 billion) for the year to March 31, much lower than a Refinitiv consensus forecast for a profit of 582 billion yen.

Nintendo also revised its annual software sales forecast down to 205 million units from 210 million, and cut its Switch console sales target to 18 million units from 19 million.

The Kyoto-based company does not plan to raise software or game console prices, but would consider doing so if circumstances demanded it, Furukawa said. He declined to comment when asked whether the company was considering a successor to the six-year old Switch.

Nintendo, which competes with PlayStation creator Sony Group Corp and Xbox maker Microsoft Corp, sold 8.2 million Switch units in the latest quarter, a 23% slide from the same period a year earlier.