Nintendo promises 10% pay hike even as it trims profit outlook

JAPANESE video game maker Nintendo said on Tuesday (Feb 7) it plans to lift workers’ base pay by 10 per cent 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, the parent of the Uniqlo clothing chain, was one of the first companies off the blocks, jolting Japan when it said last month it would hike wages by as much as 40 per cent.

“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 per cent to 480 billion yen (S$4.8 billion) for the year to Mar 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 and Xbox maker Microsoft, sold 8.2 million Switch units in the latest quarter, a 23 per cent slide from the same period a year earlier. REUTERS