Pre-tax profit for the year to the end of March was Y73.35bn(pounds 559m) against Y92.83bn previously, a decline of 21 per cent. Sales fell 14.5 per cent to Y415bn compared with the previous year's Y485bn.
Demand for video games has been slack and Nintendo and Sega, the two Japanese companies that have traditionally dominated the market, are facing increased competition, notably from Sony.
Nintendo is undergoing a period of transition as it develops its next generation of home video games.
The next product, to be run on more powerful machines, had been expected on general release by the end of this year. However, the company said recently it expected sales in the important United States market not to start until late in 1996. The strength of the yen was blamed for the delay.
At the interim stage last November, Nintendo forecast pre-tax profit in excess of Y100bn
So far, Nintendo has released only its official figures, without comment; nor has it explained why they came in so far below predictions. Its forecast of pre-tax profit in the current year of Y110bn would represent a 49 per cent improvement.