Namco Bandai Holdings Inc., which officially starts business Sept. 29, said Tuesday it expects 55 billion yen in operating profit on sales of 550 billion yen for the year ending in March 2008, or 24 percent over what the two companies' combined profit would likely have been for the current fiscal year.

The newly merged company said the bulk of the growth would come from its game business by improving efficiency in development and expanding overseas sales.

The merger of the nation's largest toy maker with major game maker Namco Ltd. is one of a string of major changes taking place in the industry, which has been struggling to deal with a market with a declining number of children and rising game-development costs.

Takeo Takasu, president of the new company, said at a news conference that he expects strong synergy from Bandai's character knowhow and Namco's game-developing technologies.

Hinting at the kinds of games Namco Bandai is likely to produce, Takasu pointed to Namco-developed video and arcade games that feature Bandai's popular Mobile Suit Gundam characters. The games predate the merger.

Takasu said the game development unit will be organized to efficiently produce titles for next-generation game consoles, which are expected to hit the market from the end of the year.

"With arrival of next-generation machines, game development costs will rapidly increase, but we will not let (total) costs rise," he said.

The new company also aims to expand overseas operations, with an eye to eventually making overseas sales account for half of total revenue compared with some 20 percent now, he said.