Square Enix Reports Lowered Profits, Unchanged Expectations

Japanese software publisher Square Enix, responsible for the Final Fantasy and Dragon Quest RPG franchises, reported its financial results for the nine-month period ending December 31, 2005. According to a translation of the official investor relations statement made by consumer site GameSpot, sales for the company increased to 68.9 billion yen ($587.1 million USD), but operating income and net profit both declined. The company's operating income decreased 75.5% to 6.33 billion yen ($53.9 million USD) while the net profit decreased 67.7% to 4.29 billion yen ($36.5 million USD). Though Square Enix had a number of successes, including sales of over 1 million for Kingdom Hearts II in Japan alone, alongside healthy sales of Romancing SaGa: Minstrel Song in Japan and Dragon Quest VIII in the U.S., the company couldn't match the profits of the 2004 period, which saw massive Japanese sales for Dragon Quest VIII. Broken down by operations, the publishing division saw a slight decline to income of 1.85 billion yen ($15.7 million USD), while the online games division income also decreased to 3.75 billion yen ($31.9 million USD), and mobile content division saw income fall to 736 million yen ($6.27 million USD). Only the company's miscellaneous operations improved its year-over-year income with an increase to 2.15 billion yen ($18.3 million USD), on the back of the release of Final Fantasy VII Advent Children. Despite the setbacks, Square Enix has not changed its guidance for investors; the company still expects to see sales of 136 billion yen ($1.15 billion USD) for the year, with operating income of 28.5 billion yen ($242 million USD) and profit of 17.5 billion yen ($149 million USD). The company may make up the shortfall with the Japanese release of Final Fantasy VII: Dirge of Cerberus, which has already sold over 500,000 copies in Japan, and the U.S. releases of Final Fantasy VII Advent Children on DVD and UMD, along with Kingdom Hearts II in late March. The company's last trump card for the year is the Japanese release of the long-awaited Final Fantasy XII, due out in mid-March.