Nidec Cuts Fiscal 2022 Guidance, but Long-Term Growth of Automotive Segment Intact

Nidec lowered its fiscal 2022 (financial year-end March 2023) operating income guidance to JPY 110 billion from JPY 210 billion, with most of the shortfall attributed to a one-time cost in the automotive segment and the rest to the economic slowdown. Although the company did not explain the details, the company plans to record an impairment loss in the European automotive business, and in addition, will work on restructuring this fiscal year to improve its profitability. As a result, Nidec’s operating margin will recover in the next fiscal year, according to management. While we maintain our view that Nidec will benefit from long-term demand for energy-efficient motors, we lower our operating margin assumption for fiscal 2023 from 10.1% to 9.3% due to: 1) lower sales forecasts for the small precision motors segment due to the inventory correction in PCs and data centers; 2) lower sales forecasts for the machinery segment as a result of the global economic slowdown; and 3) lower operating margin expectation for the automotive segment.