Nidec reports $3.59 billion loss following EV motor impairments
- Japanese motor manufacturer Nidec reported a net loss of 564.62 billion yen, equivalent to $3.59 billion, for the fiscal year ended March, according to financial reporting covered by...
- The severe financial fallout provides a detailed view of an ongoing corporate governance crisis at Nidec.
- To address the mounting pressures, Nidec replaced Chief Executive Mitsuya Kishida with Chief Technology Officer Michio Kaida, as reported by Dow Jones Newswires.
Japanese motor manufacturer Nidec reported a net loss of 564.62 billion yen, equivalent to $3.59 billion, for the fiscal year ended March, according to financial reporting covered by Nikkei Asia and Dow Jones Newswires. The massive deficit stems from a staggering 632 billion yen impairment loss, driven by a deterioration in its electric-vehicle motor business, excessive competition for household appliance motors in China, and write-downs across other divisions.
Accounting Scandal and Auditor Hesitation
The severe financial fallout provides a detailed view of an ongoing corporate governance crisis at Nidec. Earlier in March, an independent investigation committee reported that billionaire founder Shigenobu Nagamori pressured executives to achieve unrealistic earnings targets, resulting in improper accounting practices such as the early recognition of sales, avoided inventory valuation losses, and capitalized costs. Nagamori stepped down as board chairman in December and as chairman emeritus in February. Compounding these financial disclosures, Nidec’s auditor, PwC Japan, declined to state its views on the financial statements. The auditor noted that several officers and employees involved in the previously disclosed irregular accounting still hold positions of responsibility within the financial reporting process.
Executive Leadership Turnover and Delisting Risks
To address the mounting pressures, Nidec replaced Chief Executive Mitsuya Kishida with Chief Technology Officer Michio Kaida, as reported by Dow Jones Newswires. The company stated that Kishida tendered his resignation after an internal review found he had engaged in conduct or made statements regarding financial reporting that could not be regarded as appropriate. The structural overhaul comes as Nidec faces a potential delisting from the Tokyo Stock Exchange, which placed the company’s stock on special alert in October of last year and mandated internal control improvements. Beyond leadership changes, the company has actively scaled back its struggling operations, agreeing to sell an electronic parts unit to Carlyle, planning to exit Cambodia production due to a border conflict with Thailand, and deciding to end a China joint venture focused on electric vehicle drive parts.