Nidec Corporation fell into an operating loss during the fiscal second quarter after booking substantial charges tied to automotive contracts and asset impairments, capping a turbulent six-month period marked by accounting irregularities and auditor skepticism.
The Kyoto-based motor manufacturer recorded operating profit of ¥21.1 billion ($137 million) for the six months ending September, down 82.5% from a year earlier, according to company disclosures released Thursday. The sharp decline dragged the operating margin to 1.6% from 9.3% in the same period last year.
Sales rose modestly to ¥1.30 trillion, a gain of less than 1%, as growth in automotive and appliance divisions offset weakness in machinery operations. Net income attributable to shareholders fell 58.6% to ¥31.2 billion.
The company recorded approximately ¥87.7 billion in charges during the first two quarters, including ¥36.5 billion in provisions for contract losses with automotive customers, ¥31.7 billion in impairment losses on automotive assets, and ¥19.5 billion from supplier settlement claims.
The financial deterioration coincides with an ongoing investigation by an independent committee examining suspected accounting irregularities. Auditor PricewaterhouseCoopers Japan issued a disclaimer of conclusion on both quarterly periods, declining to express an opinion on whether the financial statements present the company’s position fairly.
Tokyo Stock Exchange designated Nidec’s shares as a security on special alert in late October, citing deficiencies in internal controls. The company submitted a policy document for developing remediation plans and established a corporate reform committee to address governance shortcomings.
Despite operational challenges, Nidec generated ¥112.3 billion in operating cash flow during the half, producing free cash flow of ¥45.2 billion. The company eliminated its interim dividend while maintaining capital discipline during the restructuring period.
