Square Enix today announced its financial results for the first half of the current fiscal year ending on March 31st 2006. During the first six months of the fiscal year, Square Enix reported a consolidated net loss of 3.38 billion yen ($28.47 million USD) on sales of 27.09 billion yen ($228.20 million USD). For the full fiscal year Japan's leading RPG maker projects sales of 73.86 billion yen ($622.19 million USD) and a net profit of 14.93 billion yen ($125.77 million USD).

The gaming division suffered a loss of 842 million yen ($7.09 million USD), because of a lack of hit titles and fierce competition. With Kingdom Hearts II, Dirge of Cerberus: Final Fantasy VII and Final Fantasy XII all hitting retail store shelves in Japan between late December and mid-March, the company's biggest titles will only be released during the second half of the fiscal year. Hence Square Enix president Youichi Wada mentioned during today's press conference in Tokyo that for the full fiscal year everything was looking fine. Wada was particularly hyped about Kingdom Hearts II, calling it the best masterpiece available for PlayStation 2.

With the imminent release of Final Fantasy XI on Microsoft's Xbox 360, Square Enix's online game division is expecting an increase in user numbers until the end of the fiscal year.

As far as overseas markets are concerned, the Square Enix president said vis-a-vis the ones a la Electronic Arts or Activision, Square Enix was simply not powerful enough. While he contended, that it will probably be impossible to sell one million copies of Dragon Quest VIII in the US, he hoped it will do well nonetheless. Meanwhile, he sees Kingdom Hearts II hitting American retail store shelves as early as March 2006.

As expected, Wada had little new or specific to say when it came to the question of game development for next generation consoles. If Square Enix just continued to use its current methods of developing games for PlayStation 2 and applied them to PlayStation 3 development, the company would face an explosion of development costs, according to Wada. Hence the issue right now was which functions offered by next generation hardware should be used. Developing games like it has been done until now, will cost time and money in the future.

As far as future merger and acquisition (M&A) activities are concerned, Wada stated bluntly that he had little interest in pursuing alliances with other game developers, since the direction the various companies in the game industry will take from now one will differ significantly. He was however interested in talking to companies that have no connection to games whatsoever.

• GameWatch