Square Enix posts £88m annual loss

Square Enix has posted a highly disappointing but not unexpected set of financial results for the fiscal year ended March 31, 2013.

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Following weaker than expected sales of key console games and the subsequent implementation of costly restructuring plans, the Japanese publisher reported an annual loss of 13.7 billion yen (£88m / $135m), down from a 3.5 billion yen profit forecast last October and a six billion yen profit posted the previous business year.

Company-wide sales rose 15.7 per cent year-on-year to 148 billion yen (£948m / $1.5b).

Square's Digital Entertainment segment, which houses its games business, reported sales of 89 billion yen (£569m / $876m), up 24.5 per cent year-on-year, but operating income decreased by 99.7 per cent to 44 million yen (£281,000 / $434,000).

While it hailed the performance of browser and smartphone content such as Final Fantasy Brigade and Kaku-San-Sei Million Arthur, Square cited the weak performance of core console offerings.

"The group's operating income decreased significantly, primarily due to underperformance of major titles for consumer game consoles in North America and Europe."

For the current business year ending March 31 2014, Square predicted a return to profitability. It forecast net sales of 140-150 billion yen (£896-960m / $1.4-1.5b) and net income of 3.5-6 billion yen (£22-38m / $34-59m).

Square Enix president Yoichi Wada will resign in June. His replacement, Yosuke Matsuda, has promised to thoroughly review the company's entire operations.