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Nidec eyes return to record profits on electric-car rebound

Chinese slowdown contributed to motor maker's first profit drop in six years

Nidec's electric motors are being used in mass-produced electric cars in China. (Photo courtesy of Nidec)

OSAKA -- Japan's electric motor manufacturer Nidec expects revenue and profit to reach all-time highs this fiscal year on improving demand for electric-vehicle motors, particularly in China, following its first profit decline in six years.

Nidec, the world's top electric motor and equipment maker, said Tuesday it expects a 9% increase in revenue to 1.65 trillion yen ($14.7 billion) and a 22% rise in net profit to 135 billion yen for the fiscal year ending March 2020. While profits are projected to continue falling in the six months through September, Nidec expects recovering sales in China and elsewhere to more than make up the difference in the second half.

"We can't say that the Chinese market has bottomed out, but it hasn't gotten worse," President Hiroyuki Yoshimoto said. "We think it will pick up again in July-September 2019. The electric vehicle market in particular will be strong."

GAC New Energy Automobile, an automaker under the umbrella of China's Guangzhou Automobile Group, is using Nidec motors in mass-produced electric cars and plans to employ them in a new model capable of autonomous driving under certain conditions.

Nidec President Hiroyuki Yoshimoto says factory consolidation costs played a part in his company's profit decline.

For fiscal 2018, Nidec reported a 15% decline in net profit to 110.7 billion yen as the U.S.-China trade rift and a slowing Chinese economy affected sales, though a change to a new accounting method makes a direct comparison impossible. Operating profit also fell, by nearly 17% to 138.6 billion yen.

Since fall, Nidec has experienced a sales slump for its main products, such as motors used in air conditioners and by the automotive industry, especially among its Chinese clients.

It had cut its annual operating profit outlook in January, citing increased uncertainties in the global economy triggered by the trade war.

Business conditions in China have led Chairman Shigenobu Nagamori to admit the company faces major headwinds. "We have faced extraordinary changes," he has said.

In addition to the challenging environment in China, costs for structural reforms related to consolidation of factories played a part in the annual profit decline.

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