(Bloomberg) — Shares of Square Enix Holdings Co. fell 16% in their biggest decline in 13 years, after its chairman said sales of recent big-budget games had disappointed and that it would take years for a recent reorganization to bear fruit. .
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Sales of Final Fantasy VII Rebirth, Final Fantasy XVI, and Foamstars – all released exclusively for Sony Group Corp.’s PlayStation – have increased. in the previous fiscal year – fell short of the Japanese game publisher’s expectations in revenue and profit, Takashi Kiryu told analysts in the previous fiscal year. day. The company now expects to make an operating profit of ¥40 billion this year, far below analysts’ average estimates of ¥57 billion. Its sales and dividend prospects also fell short of expectations.
Square Enix shares fell past their daily limit on Tuesday to a four-month interday low.
Kiryu, 48, reshaped the company’s structure around big-budget games while scrapping many mobile and console games in development to focus on quality over quantity. The publisher is also abandoning its practice of releasing its top-tier games first on PlayStation and will make them available on as many platforms as possible, including platforms from Nintendo Co., Microsoft Corp.’s Xbox and Xbox One. and the PC, said Kiryu. .
But it will take time for such efforts to translate into sales, he said.
“It may be great that the company has revamped its game creation channels and is restarting the company, but what do they have to sell this year and next?” Toyo Securities analyst Hideki Yasuda said. Jefferies analyst Atul Goyal downgraded his recommendation on the stock to underperform and lowered his price target to ¥4,600 per share.
Kiryu’s comments suggest that the company has failed to build on the sales momentum of Final Fantasy XVI, which investors had hoped would bolster its results following its release in June last year. Following the game’s lukewarm reception in its first week of sales, Kiryu said the company planned to sustain the title’s sales in the long term. No sales figures have been released for Final Fantasy VII Rebirth and Foamstars.
Square Enix’s mobile games have also struggled, with many games shutting down in just over a year due to poor sales. “Our winning formula is no longer effective,” said Kiryu. “It took us a long time to adjust course.”
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