Shares of Nidec Corp., a Japanese electric-motor maker, tumbled sharply after the company revised its fiscal-year net profit forecast. The company cited increasing competition in China's electric-vehicle (EV) motor market and the costs associated with restructuring its EV traction motor business.
As of Thursday morning, Nidec's shares were down 3.7% to 5,682 yen, having fallen as much as 6.2% earlier.
In an announcement made after the market closed on Wednesday, Nidec stated its intention to incur restructuring expenses to improve its financial position and enhance profitability in its EV traction motor business. This move comes as a response to the intense competition faced by the company in the Chinese EV market.
To mitigate the impact of competition, Nidec has been selectively accepting orders for only profitable EV models in China while expanding its business activities in Europe and the United States.
Nidec's net profit forecast for the fiscal year ending in March is now expected to triple to Y135.00 billion ($915.2 million), down from the previous projection of Y165.00 billion.
In the third quarter, Nidec experienced significant growth, with net profit more than doubling to Y39.84 billion compared to Y17.43 billion in the same period of the previous year. Third-quarter revenue also saw a notable increase of 4.4% to Y594.03 billion, driven by strong performance in the United States and Europe.
Despite the revised profit forecast, Nidec remains optimistic about its future prospects. The company continues to adapt its strategy to navigate the challenging Chinese EV market while pursuing opportunities for growth in other regions.