France's Ubisoft delays three releases, back catalog sales remain strong

French video game producer Ubisoft said on December 8 it was delaying the release of three games and lowering its 2017/18 sales goals while raising its targeted profit margin. While the company opted to spend more time developing the new games, it said sales of its back catalog remained strong.

Ubisoft has seen its share price almost double year-to-date, boosted by higher-than-expected sales and speculation about a takeover bid from French media giant Vivendi.

The company said it would delay the release of “Far Cry 5” by a month to March 27, 2018, while also pushing back the release of “The Crew 2” and a franchise game initially planned for release in fiscal year 2018/2019. The company now sees 2017/2018 sales of 1.64 billion euros ($1.93 billion), versus its previous goal of 1.70 billion euros.

However, it expects its operating margin to be higher than its previous target of 15.9 percent, at 16.5 percent, and it confirmed its operating income target of 270 million euros. The company also confirmed its targets for fiscal year 2018/2019.

“Our back catalog performance throughout November followed the same excellent trends as in the first half of the year and sales for ‘Assassin’s Creed Origins’ continued their positive launch trajectory,” Chief Financial Officer Alain Martinez said in a statement. The decision to delay the release of the games was seen by analysts as a sign of confidence.

“It shows that the sector is very strong at the moment and that the company can nearly live on its back catalog,” said Midcap Partners analyst Charles-Louis Planade.

“They don’t need to release these games because they can allow themselves to delay the release and maintain their [operating income] guidance.”

However, Bryan Garnier analyst Richard-Maxime Beaudoux said investors could be disappointed as consensus estimates had seen the company beating its 2017/2018 operating income guidance.

“The stock is expensive, with no speculative appeal from Vivendi over the next six months and there won’t be any outperformance for this fiscal year,” he said. In November, Vivendi ruled out a hostile takeover of Ubisoft for six months after the video games maker beat forecasts, pushing its shares to a record high.