Japanese motor manufacturing giant Nidec announced a downward revision of its profit forecast for the fiscal year ending March, attributing the change to restructuring expenses in its electric vehicle (EV) parts business. The company now expects a consolidated net profit of 135 billion yen ($910 million), a reduction of 30 billion yen from its earlier projection.
The revision comes amid a competitive and challenging landscape in the Chinese EV market. Nidec’s E-Axle traction motor system, central to its EV parts division, has experienced sluggish sales. Revenue in this segment is projected to decline to 4.5 billion yen in the January-March quarter, continuing a trend of underperformance.
Nidec Chairman and CEO Shigenobu Nagamori highlighted the unprecedented nature of these challenges, citing widespread losses across competitors and customers in the sector. In response, Nidec has scaled back on accepting new orders to mitigate unprofitable projects. This strategic shift accompanies a 45 billion yen restructuring charge, contributing to an anticipated operating loss of nearly 60 billion yen for the EV parts division this fiscal year.
Despite these setbacks, Nidec projects a 3% year-on-year increase in consolidated sales to 2.3 trillion yen. The operating profit is forecast to rise by 80% to 180 billion yen, although this figure represents an 18% decrease from market expectations.
The company is undergoing a strategic shift, with Executive Vice President Mitsuya Kishida taking charge of the EV division. This change aims to rejuvenate the company’s focus on EV parts, a crucial growth area. In addition, Nidec plans to boost its quarterly earnings forecasts through the January-March 2025 period, leveraging a new joint venture with Stellantis.
Despite the current challenges, Nidec’s revised net profit guidance remains the second highest on record, following a robust performance in the previous fiscal year. The company also plans to increase its annual dividend, reflecting a long-term positive outlook. With eyes on expanding in emerging markets like India and Africa, Nidec remains committed to adapting and growing in the dynamic global EV market.
