TOKYO (Reuters) -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.
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.
It said a probe by a third-party committee into suspected inappropriate accounting practices was ongoing, and that if false representations are found, they could have a significant and widespread impact on the company’s financial statements.
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% from a year earlier, it said.
Nidec said it plans to submit a draft improvement plan to regulators by mid-December and disclose progress in January.
In September, the Kyoto-based company formed an independent 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.
After placing the company on a “special alert”, the Tokyo Stock Exchange gave it one year to improve internal controls or risk delisting. Nidec apologised to shareholders after the warning was issued.
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.
($1 = 154.4500 yen)
(Reporting by Daniel Leussink and Kaori Kaneko; Editing by Clarence Fernandez and Christopher Cushing)
