Sega slashes profit forecast: Video game group says strength of yen will hit earnings. Gail Counsell reports

SEGA ENTERPRISES yesterday slashed its profit expectations for this year, warning that earnings would be badly affected by the strength of the yen.

The Japanese video game group, which owns and operates amusement arcades as well as producing computer game hardware and software, is highly sensitive to currency movements. Exports contribute 87 per cent of game division sales, which in turn account for more than two-thirds of group revenues.

Sega said it had originally assumed an average exchange rate of Y110 to the dollar for the year to March 1994, but had since revised its forecast.

In the six months to end-September, the average exchange rate was Y107 to the dollar, producing pre-tax profits of Y28.6bn (pounds 166m) - about Y400m lower than they would have been had last year's exchange rates prevailed.

But Sega is anticipating an even more unfavourable exchange rate in the second half, of about Y105 to the dollar. As a result, the company expects pre-tax profits this year to total about Y57.5bn, compared with an earlier estimate of Y63.3bn.

As well as the strength of the yen, the company admitted for the first time that it has been affected by a sharp fall in European demand for its eight-bit computer game consoles, as buyers have plumped instead for more sophisticated 16-bit machines.

Nevertheless, Sega said sales of computer games have remained strong, especially in the US.

In the UK, Sonic 2, Sega's best-selling UK title, has sold about 1 million units since it was launched last Christmas, according to the group's British arm.

Sega claims to be catching up quickly on its bigger rival, Nintendo. A spokesman for the group said that while its market share of the US consumer equipment market was about equal to Nintendo's in terms of shipments, its market share in terms of sales was more than 60 per cent.

It is expecting to sell about 6 million 16-bit Genesis game machines in the US in the year to March. Sales of Game Gear models are estimated at 2.3 million units and those of its newest product, CD-ROM computer game machines, at 650,000 units.

But Sega has reduced its expectations for sales in Europe, where its products are generally more expensive than Nintendo's. It now expects sales of the Genesis, Game Gear and CD-ROM computer game machines to total 5.3 million units in Europe in the year to March 1994.

Moreover, while strong sales of computer games in the US will continue to underpin earnings for a while, a group spokesman said Sega believed that demand for 16-bit computer game equipment 'is nearing the peak even in the US'.

----------------------------------------------------------------- TOP TEN ----------------------------------------------------------------- 1 (1) Mortal Kombat 2 (2) Mario All Stars 3 (7) Sonic the Hedgehog 2 4 (6) Jurassic Park 5 (26) Streetfighter 2 Turbo 6 (9) Super Kick Off 7 (-) Streetfighter 2 Champ Ed 8 (8) Lemmings 9 (4) Jungle Strike 10 (3) Striker The chart shows the best-selling cartridge computer games in October. Previous month's rankings in brackets. ----------------------------------------------------------------- Source: Gallup -----------------------------------------------------------------

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
Life and Style
A monstrous idea? Body transplants might no longer be science fiction
Science An Italian neurosurgeon believes so - and it's not quite as implausible as it sounds, says Steve Connor
Sport
Demba Ba (right) celebrates after Besiktas win on penalties
footballThere was no happy return to the Ataturk Stadium, where the Reds famously won Champions League
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
arts + ents
News
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
arts + ents
News
people
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
arts + ents...begging to differ, John Walsh can't even begin to number the ways
News
Image from a flyer at the CPAC event where Nigel Farage will be speaking
news
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales / Marketing Executive - B2B - OTE £25,000

£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...

SThree: Trainee Recruitment Consultant

£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Recruitment Genius: Business Control Manager

£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower