Nidec Corp, a leading manufacturer of electric motors, has seen its shares drop by as much as 7% in Tokyo after announcing a significant cut to its full-year profit forecast. The company cited a slow recovery in the car industry and expenses from a restructuring push as the reasons for the nearly 50% reduction in its forecast. The announcement followed the release of the company’s third-quarter results, which showed an operating profit of 28 billion yen, a 37% decrease from the previous year.
This news comes as Nidec faces weakening demand in the tech sector due to a downturn in the personal computer and data center market. A company executive stated that the downturn may continue until June, leaving investors uncertain about the company’s ability to recover. The company’s share price has dropped almost 50% since early last year and is currently trading at 7,114 yen, still above a 2-1/2 year low of 6,658 yen hit on January 4th.
Despite the negative outlook, some analysts believe that the company’s profitability will return after its restructuring costs disappear. However, the uncertain external and macroeconomic conditions make it difficult to predict when this recovery will occur. Investors will likely be looking for evidence of this recovery in the coming months.
As the world becomes increasingly digital, the demand for electric motors is expected to continue growing. Nidec Corp, with its strong track record and expertise in the industry, could potentially bounce back from this setback and regain its position as a leader in the electric motor market. However, it will have to navigate the challenges of the current economic conditions and the ongoing effects of the pandemic.
