Nidec Corporation

Nidec’s Q1 FY2025 preliminary results showed net sales of JPY637.9 billion, down 1.6% year over year, operating profit of JPY61.5 billion, up 2.3%, profit before income tax of JPY59 billion, down 24.5%, and quarterly profit attributable to owners of the parent of JPY45.5 billion, down 18.5%. The yen appreciated 7.2% against the U.S. dollar in the middle of the quarter and 10.1% by period end. FX impact was estimated at JPY35.8 billion on sales and about JPY2.6 billion on operating profit. Free cash flow was plus JPY9.8 billion, and management said the full-year forecast remains unchanged. Segment commentary pointed to higher profit in small precision motors and automotive versus the prior quarter, while appliance/commercial/industrial and automation/machinery were weaker. On the guidance side, management said it still expects a significant conversion in Q3 and Q4, with demand growth in power generators and a backlog of more than JPY400 billion in the mine business unit.

CEO Mitsuya Kishida framed the quarter around resetting the company’s structure, saying Nidec needs to become a “bigger and better global company” and that he is personally committed to fixing structural reform, business reform, integration, and global headquarters reform. He emphasized a shift away from charismatic, deal-by-deal management toward a systemized global organization with five business pillars, stronger technology coordination, and more disciplined portfolio management. His tone was assertive and reform-oriented, with repeated references to expanding data-center, cooling, compressor, and power-generation businesses as future growth drivers.

CFO Akinobu Samura focused on the preliminary financials, the unusual disclosure process, and cash generation. He apologized for the extra investigation tied to the IRC country-of-origin issue, explained that the company chose voluntary preliminary disclosure, and said the full-year forecast remains unchanged. He also noted that free cash flow was only plus JPY9.8 billion because working-capital reduction did not progress as planned, especially due to inventory in the MOEN energy-related business and machine tools. Samura highlighted operational improvements in small precision motors and automotive, but also pointed to temporary cost burdens such as JPY2 billion tied to structural reform and JPY1 billion in appliance/commercial/industrial.

Analysts pressed on the IRC country-of-origin issue, asking what happened, how broad the investigation is, and whether the company can meet the extended reporting deadline; Kishida said the problem began with FIR, a business acquired from Kinetek in 2012, that investigation of FIR is complete, and the company is now broadening scope across ASIM to ensure no similar issues exist. Questions also focused on the JPY100 billion variable-cost reduction and whether it would require additional fixed-cost pain; management said the plan includes business exits, customer negotiations, and site consolidation, with no exceptions across businesses. Analysts asked about tariffs and indirect demand risk, and management said direct tariff impact is limited because of localized production, though they estimated JPY5 billion to JPY6 billion of impact and said they are working with customers to minimize it.