Japan's Nidec to submit improvement plan to stock exchange, skips annual forecast
Nidec Corp's logo is pictured at an earnings results news conference in Tokyo, Japan, July 25, 2018. REUTERS/Kim Kyung-Hoon
TOKYO :Japanese electric motor maker Nidec said on Friday it will submit an improvement plan to the Tokyo Stock Exchange after being placed on a "special alert" by the bourse, and downgraded its first-quarter result to a loss.
The company, which has positioned itself as a key supplier for electric vehicles, refrained from issuing a new annual operating profit forecast for the year to March 2026, having scrapped its previous 260 billion yen ($1.68 billion) guidance in late October.
"We deeply apologise for the great inconvenience and concern caused to our shareholders and investors," chief executive Mitsuya Kishida told a results briefing in Tokyo. He and two other executives apologised the downward revision and the stock exchange warning.
Nidec was placed on a "special alert" in October, and was given one year's time by the Tokyo Stock Exchange to improve internal controls or risk delisting.
In September, the Kyoto-based company set up an external committee to probe the possible involvement of management in improper accounting after an internal probe flagged issues at a Chinese subsidiary. The move escalated concerns over governance and sent its shares sharply lower.
The company revised its first-quarter operating result to a 26.4 billion yen loss from a previously reported profit of 61.5 billion yen, after factoring in contract and impairment losses in its automotive products segment and recording of suppliers' settlement claims.
Operating profit in the second quarter to end-September was 21.1 billion yen, down 21.4 per cent from a year earlier, it said.
Kishida said during the results briefing the company would not receive a final report on the probe into accounting practices before the end of the year.
If that probe found false representations, they could have a significant and widespread impact on its financial statements, the company said in a filing.
Nidec said it plans to submit a draft improvement plan to regulators by mid-December and disclose progress in January.
The company was removed from the Nikkei 225 earlier this month, triggering forced selling by passive funds tracking the index.
The accounting scandal has renewed scrutiny of founder Shigenobu Nagamori's leadership and the company's aggressive expansion through acquisitions. Kishida was picked last year to succeed Nagamori as CEO.
Nidec's stock has shed more than 20 per cent of its value this year, underperforming a more than 25 per cent rise in the Nikkei index over that period.
($1 = 154.4500 yen)
