Final Fantasy and Dragon Quest series creator and publisher Square Enix warns investors that it will report losses of around ¥12 billion ($148m / £90.6m) for its fiscal year later this week. Digital project cancellations, the recent natural disasters in Japan, associated closures and restoration of the company's amusement facilities are being blamed for the losses. The digital projects represent slightly over a third of the total loss.
"Under a rapidly changing operating environment and more prudent estimates of future cash flows, the Company plans to write down goodwill (approximately ¥8.8 billion)," read the statement. "Further, as a result of introducing a tightened selection standard regarding title lineup to strengthen the revenue base of the Company's digital entertainment segment, project development cancellation and related losses (approximately ¥4.5 billion) are expected."
"The above factors as well as losses on retirement of noncurrent assets (approximately ¥0.6 billion)," the statement continues, “losses on adjustment for changes of accounting standard for asset retirement obligations (approximately ¥0.5 billion) and other losses are expected to result in total extraordinary losses of approximately ¥16.0 billion during the fiscal year ended March 31, 2011."
Square Enix also expects sales to drop slightly, from ¥130 billion to ¥125 billion, despite Dragon Quest Monsters Joker 2 Professional topping the Japanese charts. Last year, the company posted profits of ¥9.5 billion.