Ubisoft expects lower profits in 2022-23 after missing full-year estimate

(Reuters) -French video game group Ubisoft on Wednesday forecast lower operating profit for 2022-23 after the company reported operating income for 2021-22 that missed estimates.

Gaming companies saw a jump in demand in 2020 as people were restricted to their homes during coronavirus-related lockdowns but some are now facing production delays.

Ubisoft, whose titles include “Prince of Persia” and “Rainbow Six”, expects to post non-IFRS operating profit of around 400 million euros ($422.00 million) in 2022-23, below the level in 2021-22.

For 2021-22, the company reported non-IFRS operating income of 407.6 million euros ($429.45 million), below the company’s guidance of 420 to 500 million euros.

The French group expects to return to significant topline growth this financial year, driven by a diverse line-up of premium games such as “Avatar: Frontiers of Pandora”, “Mario + Rabbids: Sparks of Hope” and “Skull & Bones”.

“To be more precise, we’re talking about a top-line growth that exceeds 20%,” Ubisoft’s co-founder and Chief Executive Yves Guillemot said on a call with analysts.

Credit Suisse analyst said in a note that he sees “limited comfort” from the company’s guidance since Ubisoft has missed expectations in the last few years.

On the topic of consolidation in the industry, Guillemot said he does not expects Ubisoft to merge with other companies.

“We have everything we need to remain independent. We have the talent, the industrial and financial scale, and a large portfolio of powerful IPs to create massive value in the coming years,” Guillemot said on a conference call.

In April, Bloomberg reported takeover interest for Ubisoft from private equity firms including Blackstone and KKR, citing people with knowledge of the matter.

The Paris-listed company sees a “significant progression” of its operating income in 2023-24 as it expects to grow its biggest franchises and expand its overall portfolio.

($1 = 0.9491 euros)

(Reporting by Anait Miridzhanian and Enrico Sciacovelli. Editing by Jane Merriman)