Nidec announced on September 30 its consolidated financial results for the fiscal year ended March 2026, incorporating the findings of an investigation into accounting irregularities.
Following the discovery of widespread accounting misconduct, the company reassessed the value of its assets and recorded approximately ¥632.1 billion (about $4.2 billion) in impairment losses.
As a result, Nidec posted a net loss of ¥564.6 billion ($3.6 billion) for the fiscal year, compared with a revised net profit of ¥84.6 billion for the previous fiscal year.
The investigation uncovered numerous accounting irregularities, including delays in recognizing losses and practices that made the company’s sales and profits appear higher than they actually were.
By business segment, impairment losses totaled ¥335.1 billion in the home appliances, commercial, and industrial segment and ¥231.0 billion in the automotive segment. The losses were also exacerbated by intensifying competition in China’s home-appliance motor market and slower growth in the electric vehicle (EV) market.
On the same day, Nidec submitted its securities report for the fiscal year ended March 2026 to the Kanto Local Finance Bureau. The filing had been delayed to allow time for the investigation.
PwC Declines to Issue Audit Opinion
PwC Japan, which audited the company’s financial statements, declined to express an audit opinion on the report.
The auditor explained that it declined to express an opinion because some executives who had been involved in, directed, or were aware of the improper accounting practices, or who had provided false explanations, remained in positions of responsibility within the financial reporting process.
PwC also said it was unable to obtain sufficient evidence to determine whether any misstatements resulting from those individuals’ involvement remained undetected, or whether the amounts and timing of certain impairment losses had been appropriately determined.
Nidec’s securities report for the previous fiscal year also received no audit opinion, a highly unusual situation for a major publicly traded company.
Nidec’s shares were designated by the Tokyo Stock Exchange as a “Security Under Supervision” in October last year. The company is required to submit a report on the status of its internal management controls by the end of October this year. If the exchange determines that the company’s improvements are inadequate, Nidec could face delisting.
Professor Takatoshi Hayashi of Kwansei Gakuin University said the auditor’s decision not to express an opinion would be a major disadvantage in TSE’s review for lifting Nidec’s supervision designation. “The risk of delisting is at a realistic level,” he said.
President Resigns Amid Reform Efforts
On September 29, Mitsuya Kishida resigned as president. Kishida had been leading efforts to reform Nidec’s corporate culture and governance.
At the time of his resignation, Nidec said it had confirmed that Kishida had previously engaged in inappropriate conduct related to financial reporting.
With the auditor expressing serious concerns about Nidec’s internal controls and the president who had been leading the reform effort stepping down, the company now faces a critical test: whether it can genuinely rebuild its internal management and control systems.
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(Read the article in Japanese.)
Author: Hiroto Kuwajima, The Sankei Shimbun
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