On Wednesday morning in Tokyo, shares of Japan’s Nidec Corp (6594.T) fell as much as 7% after the electric motor manufacturer virtually slashed its full-year profit prediction due to a delayed recovery in the auto industry and costs associated with a restructuring drive.
The company dropped its operational profit prediction for the fiscal year through March by 48%, to 110 billion yen ($843 million), considerably below analysts’ expectations after the markets closed on Tuesday.
Investors were unpleasantly surprised by the third-quarter results, which saw the Kyoto-based company post an operating profit of 28 billion yen, down 37% from a year earlier, according to Kazuyoshi Saito, senior analyst at Iwai Cosmo Securities.
Even when the company’s restructuring expenditures are gone by the end of the next quarter, he added, “there is unpredictability in external and macroeconomic conditions.”
Because of a decline in the demand for personal computers and data centers, Nidec is seeing weaker demand in the tech industry. On Tuesday, a firm leader predicted that the negative cycle may last until June.
Since early last year, the share price of the corporation has decreased by over 50%. On Wednesday, shares were last trading at 7,114 yen, down 5.8% on the day but still holding above a 2-and-a-half year low of 6,658 yen set on January 4.
($1 = 130.35 yen)