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Nidec Slides After Announcing CEO Change and Outlook Misses

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River Davis
·2-min read
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(Bloomberg) -- Nidec Corp. shares fell as much as 8.4% -- the most since March 2020 -- after the company’s profit forecast for this fiscal year missed estimates and it announced that founder Shigenobu Nagamori will step down as chief executive.

Nidec pared the loss to close down 5.1% in Tokyo, erasing a 4.5% gain that came Thursday when it reported results. The motor maker expects operating profit of 180 billion yen ($1.7 billion) this year, short of the 199 billion yen predicted by analysts. The shares are now around the same level as at the start of the year.

Kyoto-based Nidec said Thursday that Nagamori will hand over leadership to former Nissan Motor Co. executive Jun Seki after close to half a century at the helm, as the company pushes forward with an ambitious pivot into the electric-vehicle supply chain.

More: Billionaire Founder of Nidec Hands Reins to Ex-Nissan Star

Jefferies analyst Yoshihiro Azuma warned there could be some short-term negative market reaction to the change due to Seki’s lack of track record at the company he joined only last year, but he remained bullish overall, saying Nidec’s DNA wouldn’t change. The company will “maintain its core advantages of solid execution, fast capacity ramp-up, targeted investments, and cost-cutting capability,” Azuma wrote in a note.

Nidec reported operating profit of 160 billion yen for last fiscal year, a 45% increase thanks to its automotive and appliance motor businesses as well as cost-cutting. The average estimate from analysts was for profit of 158 billion yen.

Seki, the former vice chief operating officer at Nissan, will lead Nidec’s push to gain 40%-45% share of the market for EV motors. The company has pledged to spend close to $10 billion over the next five years, building capacity and driving down prices in a bid to woo EV makers like Tesla Inc.

Under Nagamori’s leadership, Nidec came to be regarded as a bellwether of manufacturing trends, picking up early on shifts such as the growth of factory automation. The Japanese billionaire relied on mergers and acquisitions to build the company’s exposure to new technologies and markets -- a tactic Nidec is turning to again in its push into the EV space.

(Updates share move.)

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