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Analysts downbeat on Toei’s prospects

Japanese animation company Toei has seen profits slip in the most recent reporting period and has warned there will be further declines going forward. Analysts said the cost of new broadband operations and mobile phone initiatives combined with a lack of hit products mean the company is facing tough times.

“With no new major hit products, Toei Animation has been making the best of the situation by issuing DVD versions of past products and developibng existing products for the overseas market,” investment bank Morgan Stanley notes in a report on the company.

The report continues: “However, these areas have insufficient power to provide a big boost to sales. In addition, some start-up costs for new businesses directed at cell phones and broadband have been putting somewhat of a burden on the cost side. With no major hits coming out, the current earnings situation is severe.”

Toei registered a 17.6% drop in operating profit of Yen2.6 billion ($TK) in the most recent reporting period. The company is forecasting operating profit will fall 15.6% going forward, which, Morgan Stanley notes, would mark the third consecutive term of double-digit decline.

Japan-listed Toei, which was founded in 1948, produces animated movies and TV series including One Piece, Dragonball and Yes! Pretty Cure 5 Go Go! It has international sales offices in France, Hong Kong and LA.