Nidec Corporation

The FY3/2026 annual securities report (filed September 30, 2026) restated prior years back to FY3/2022. FY3/2025 and FY3/2026 below are on the restated basis. FY3/2022–FY3/2024 are as originally reported, because the restated detail for those years mainly moves profit between periods. On the restated basis, cumulative operating profit across the affected years falls by about ¥166.4 billion.

FY3/2025 was originally reported as sales ¥2,607.8 billion, operating profit ¥238.1 billion, pre-tax profit ¥233.3 billion and net profit ¥164.4 billion (EPS ¥143.06). The restated figures are sales ¥2,606.3 billion, operating profit ¥128.2 billion, pre-tax profit ¥124.6 billion and net profit ¥84.7 billion (EPS ¥73.69).

Income statement

Diluted EPS is not reported separately because Nidec has no material dilutive instruments. Revenue CAGR was 9.0% from FY3/2022 to FY3/2026 and 6.5% from FY3/2023 to FY3/2026.

FY3/2026 profit bridge.

• Operating profit before the ¥632.1 billion impairment was about ¥113.1 billion, a 4.2% margin.

• Other charges included ¥30.5 billion of special investigation costs and a ¥22.5 billion contract-loss provision.

• On a nine-month basis (restated), sales were ¥1,986.4 billion (+2.4%) and operating profit ¥115.7 billion (−28.7%). The fourth quarter alone carried an operating loss of ¥634.7 billion on sales of ¥722.3 billion (+8.5% year on year).

• Nine-month results also included a ¥17.6 billion impairment and a ¥16.5 billion supplier-claim settlement in automotive.

• Below operating profit, FX gains of about ¥14.7 billion partly offset losses.

Trends and drivers.

Sales: Sales grew every year in the period. Inflection points were the FY3/2023 margin collapse (EV traction-motor restructuring and cost inflation), the FY3/2025 record year (HDD, AI-cooling, data-centre power and the PSA step acquisition) and the FY3/2026 impairment year.

Restated quality of earnings: The restatement shows that headline margins in FY3/2024–FY3/2025 were flattered by deferred impairments, misclassified expenses, premature revenue recognition and manipulated provisions. The restated FY3/2025 operating margin is 4.9%, against the 9.2% originally announced.

EBITDA: FY3/2026 EBITDA is not shown because D&A for the year has not been broken out separately in the published summary. On an underlying basis, EBITDA before impairment was roughly in line with FY3/2025.

Balance sheet

FY3/2022–FY3/2025 balance-sheet figures are as originally reported. FY3/2026 is the restated, post-impairment position. Total debt includes lease liabilities.

(PP&E is shown only for the two years compared in the impairment discussion.)

Commentary.

Equity shrank by more than half: Total equity fell to ¥764.7 billion, and equity attributable to owners was ¥794.2 billion (non-controlling interests were negative ¥29.4 billion). The equity ratio is 25.6%. Net assets fell ¥476.9 billion over the period, of which about ¥208 billion is attributed to the accounting corrections.

PP&E halved: (¥931.1 billion to ¥449.7 billion) and goodwill fell 58% (¥407.1 billion to ¥170.2 billion).

Liquidity buffer: Cash rose to ¥852.2 billion, funded by short-term borrowings that jumped from ¥93.7 billion to ¥587.0 billion. This is a precautionary buffer, backed by a committed credit line arranged in late 2025, held while the company is shut out of normal bond-market access.

Other balance-sheet items at March 31, 2026: inventories ¥561.0 billion, trade receivables ¥736.5 billion, retained earnings ¥314.8 billion.

Cash flow

Commentary.

Cash generation held up through the crisis: FY3/2026 operating cash flow was ¥234.2 billion (−14.0%). Free cash flow on Nidec's own definition (operating plus investing cash flow) was about ¥98.0 billion. Nine-month free cash flow was ¥72.0 billion, up ¥2.5 billion year on year. Accrual analysis (net income ¥−564.6 billion versus operating cash flow ¥234.2 billion) confirms the loss was overwhelmingly non-cash.

Capex: The FY3/2026 plan had been ¥140 billion.

Shareholder returns stopped: No interim or year-end dividend was paid for FY3/2026, and the approved buyback was cancelled in October 2025. A later legal finding established that the buybacks and dividend made between September 2022 and March 2023 exceeded the distributable amount allowed under the Companies Act, and this is now the subject of litigation.

Ratios

Notes.

ROIC: On the company's definition and original basis, ROIC was 7.2% in FY3/2025, with a target of 12% under the now-superseded Conversion 2027 plan. For FY3/2026, ROIC on an after-impairment basis is about −54%.

Other ratios: Interest coverage and the cash conversion cycle are not reported as headline metrics.

Leverage: Interest-bearing debt excluding leases was about ¥1,018 billion against attributable equity of ¥794.2 billion (D/E 1.28×). Net debt was lower than a year earlier because of the cash build.

Management guidance

For FY3/2027, management expects sales of ¥2,800 billion (+3.4%), operating profit of ¥200 billion (7.1% margin), pre-tax profit of ¥180 billion and net profit of ¥100 billion, a return to profit at every level, assuming ¥150/US$ and ¥180/€. The dividend is undetermined. The Re-Definition plan's main metric is ROIC improvement through site and entity consolidation, ¥130 billion of IT and manufacturing investment, and portfolio pruning.

Consensus expectations

Before the September 2026 reset, consensus expected sales of about ¥2.7–2.8 trillion and EPS of about ¥165 for FY3/2027. Post-reset consensus has been unsettled by rating suspensions. Company guidance sits about 23% below the last available pre-tax consensus.

Bull case

1. Underlying business is intact. Operating profit before impairment was about ¥113 billion in a crisis year. Operating cash flow was ¥234 billion. SPMS earns 15.5% and MOEN grows more than 20% on data-centre demand.

2. Clean balance-sheet reset. After ¥632 billion of impairments and the restatement, depreciation and goodwill burdens are lower, which could make FY3/2027 guidance conservative. Disposals (Nidec Components ¥103 billion, e-axle exits) remove losses and raise cash.

3. Governance catalyst. A majority-outside board, legal action against former leaders and a 9% activist holder raise the chance of either a credible remediation that lifts the Special Alert or a take-private bid at a premium.

Bear case

1. Delisting or a prolonged Special Alert. Without an unqualified audit opinion, the TSE could extend the designation (re-review until June 2028 at the latest) or delist, cutting the investor base and forcing selling.

2. Quality fallout is not fully priced. 844 violations, including falsified data, could trigger customer claims, programme losses and further provisions, especially in appliance and automotive motors.

3. Financial fragility. Ba3 rating, equity ratio of 25.6%, 60% of debt short-term and a ¥100 billion profit target that depends on stable markets and on a management team simultaneously running remediation, divestitures and site consolidation.

Key catalysts (next 12 months)

November 2026: Catalyst: Completion of PwC's additional procedures; possible unqualified opinion on the FY3/2026 statements

By mid-November 2026 or later: Catalyst: Delayed Q1 and Q2 FY3/2027 results

December 1, 2026: Catalyst: Closing of the Nidec Components sale

December 2026 – January 2027: Catalyst: TSE decision on the Special Alert: lift, extend or delist

FY3/2027: Catalyst: Filing of the damages suit against nine former executives; progress of the derivative suit

FY3/2027: Catalyst: Board response to Oasis's call for a review of privatisation options

FY3/2027: Catalyst: Agreements to dissolve the GAC and Stellantis e-axle JVs

FY3/2027: Catalyst: Moody's rating review; restoration of bond-market access

FY3/2027: Catalyst: Dividend policy decision

FY3/2027: Catalyst: Data-centre liquid-cooling and alternator order momentum; semiconductor-equipment demand for Nidec Instruments and Nidec Advance Technology

Analyst verdict

Nidec is now two companies in one share. The first is an attractive industrial franchise. It leads in HDD motors and glass transfer robots, is fast-growing in data-centre power, and has a capable semiconductor-automation and test portfolio. It generated more than ¥230 billion of operating cash during the worst year in its history, and SPMS margins reached 15.5% while the group was under investigation. Even on restated, post-impairment numbers, the underlying operating profit run rate of about ¥110–200 billion supports an enterprise value above the current market price if the governance discount can be removed.

The second is a governance case in which the market cannot yet verify the numbers. Two consecutive audit disclaimers, 844 quality violations, a cumulative accounting impact above ¥160 billion and a CEO who resigned the day before the results were filed show that the founder's culture of hitting targets at any cost reached deep into operations. Kaida's team has done most of what a credible clean-up requires: an outside-led board, independent accounting, litigation against former leaders, an exit from the loss-making e-axle business and the first disposal. But the single decisive variable, the TSE's judgement on internal controls backed by an unqualified PwC opinion, is outside management's full control and is unlikely to be settled before early 2027.

If the audit opinion is obtained and the Special Alert is lifted or credibly extended, the stock should re-rate towards peer multiples on normalised earnings, and Oasis's presence keeps a take-private option open. If PwC does not sign or the TSE finds controls are not functioning, the shares face index exclusion, forced selling and a possible delisting-driven value transfer to a private buyer. Our overall assessment is high-risk and high-dispersion: the operating assets are better than the equity's price implies, but governance risk, not business quality, will set the share price for the next two to three quarters. Investors should treat the November 2026 audit outcome and the TSE ruling as binary gates before taking positions on fundamentals.