Nidec shares extend slide in Tokyo after motor maker's accounting woes deepen

By Ritsuko Shimizu

Shares of Japan's Nidec 6594 slumped a further 3.6% on Friday after the precision motor maker withdrew its full-year earnings forecast, the latest twist in a deepening accounting scandal.

The stock has lost more than 21% since September 3, when the Kyoto-based supplier to Apple AAPL said it was setting up an independent committee to investigate the possible involvement of management in improper accounting at a Chinese subsidiary.

In addition to withdrawing its forecast for the fiscal year to March 2026, Nidec said it would not pay an interim dividend and had cancelled an already approved share buyback programme on account of the investigation.

"Nidec will promptly announce the year-end dividend forecast and consolidated financial forecasts once it becomes possible to do so," the company said.

Deputy head of research at Yamawa Securities Takeshi Tago said, "announcing this based on the independent committee’s investigation suggests the company is starting to see the impact on earnings."

"However, investors don’t know the extent of the impact, so caution is driving heavy selling,” he added. "Despite the declines, there are no signs of any appetite for bargain hunting."

There are concerns among market participants that a delisting may be next.

For now, the Tokyo Stock Exchange's hands are tied, as it needs to wait for the findings of the independent committee on how deep the accounting irregularities extend.

“Investors do not have the information necessary to make investment decisions,” said Natsumi Yamawaki, an investigator in the TSE’s Listing Department Planning Group.

The issues with the Chinese unit were preceded by the company's revelation in June of possible lapses at its Italian subsidiary, causing Nidec to delay the filing of its financial report for the previous fiscal year.

Although Nidec met a delayed deadline to submit the annual report last month, the company's auditor, PwC Japan, withheld an opinion on its financial statements, citing insufficient audit evidence.

UBS Securities analyst Shingo Hirata said the case may reflect Nidec's past focus on rapid growth through aggressive acquisitions.

At the same time, he sees several positives for the company that could catalyse a share rebound, including its attempt to concentrate more on data centres.

“Based on my discussions with investors, full disclosure of the independent committee’s findings is essential for the stock to bottom out,” Hirata said.