TOKYO -- Nidec, the world's largest motor maker, is aiming for a quick return to record profits as it bets on dramatic growth in electric vehicle demand in China.
For the first quarter of fiscal 2020, the Kyoto-based company reported a 1.7% rise in operating profit from a year before to 28.1 billion yen ($261.93 million), even as sales fell 6.6% to 336.8 billion yen. The company said it has redoubled efforts for cost reduction.
Sales of automotive motors during the April-June quarter fell by half, as automakers around the world shut down production amid the coronavirus pandemic.
Nidec says, however, that it is looking beyond COVID-19 and is aggressively moving into new areas, as sales of traditional equipment have slumped.
"The macroeconomic environment remains challenging," Nidec Chairman and CEO Shigenobu Nagamori said Tuesday at a news conference. "Auto production has stopped. But the trend toward electrification hasn't. More and more companies want to produce EVs."
Nagamori added that the company has weathered challenging times before. "We reported a record profit the year after the Lehman crisis," he said. "We have a similar ambition in the wake of the coronavirus crisis."
Nidec recently decided to build a new research and development facility in China for EV drive motors even as many U.S. companies move investment away from China.
The Japanese company is betting that EVs will overtake gasoline vehicles in terms of cost and convenience in around five years, and is trying to position itself for the new era.
"We are like Tesla in the automobile motor business," Nagamori said. Noting that Tesla recently overtook Toyota Motor to become the world's most valuable automaker by market capitalization, he asked rhetorically why this had happened. "Because investors are anticipating a shift to EVs. We need to prepare for a dramatic shift."
But Nagamori grumbled about Nidec's share price, which has been moving sideways in the past couple of years. Nidec is officially predicting a 2% dip in sales to 1.5 trillion yen for the year ending March 2021, but stands by its ambition of reaching 2 trillion yen in the current fiscal year.
Nidec says that its drive motors for EVs have been adopted by 15 automakers worldwide, including more than 10 in China. But the company stresses that competition remains intense.
"Cost competition will continue for a while," said Jun Seki, Nidec president and chief operating officer. "We will reduce the cost of our products by 30%, added the former Nissan executive. "We will reduce costs until rivals can no longer compete with us."
The coronavirus has created new demand for its motors, Nidec said. As more people work from home, sales of laptop computers soared, boosting demand for the company's motor fans to cool computer microprocessors.
Demand for micro fans also got a boost from electric face masks with built-in fans.