Nidec Corporation Raises Annual Profit Outlook Following Strong Q1 Performance
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On Tue, 23 Jul, 4:02 PM UTC
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[1]
Japan's Nidec lifts annual profit outlook after Q1
TOKYO, July 23 (Reuters) - Japanese electric motor maker Nidec raised its full-year operating profit forecast by 4.3% on Tuesday off the back of a recovery in demand for hard drive motors, efforts to raise its profitability and a weaker yen. The company raised its expectations for operating profit in the financial year to the end of March 2025 to 240 billion yen ($1.53 billion), versus an earlier forecast of 230 billion yen and an average analyst view of 246.9 billion yen. Operating profit for the April-June quarter totalled 60.3 billion yen, largely in line with 60.2 billion yen in the same period a year earlier and compared with the average estimate of 58.4 billion yen in a survey of four analysts by LSEG. "Nidec expects rapid demand expansion of power generators which are essential to data centers," the company said in a statement. It said it saw demand for hard drive disk motors recovering and that for water-cooling modules for artificial intelligence expanding rapidly. The company said last month its business in water-cooling modules for generative AI data centers could expand to 1 trillion yen in sales in the future. Nidec separately announced it signed a memorandum of understanding on Monday with Tata Elxsi, an Indian technology service provider, to develop software programs for India and other markets. Previously, the company made a big bet on components for electric vehicles, but has been facing headwinds in that market in recent months due to demand uncertainty and heavy price competition in China. Nidec reported the results after it revised down its operating profit for the financial year ended in March 2024 and the one before that after determining that some sales were "recorded in an inflated manner" at a subsidiary. ($1 = 156.4100 yen) (Reporting by Daniel Leussink; Editing by Himani Sarkar and Neil Fullick)
[2]
Japan's Nidec Lifts Annual Profit Outlook After Q1
TOKYO (Reuters) - Japanese electric motor maker Nidec raised its full-year operating profit forecast by 4.3% on Tuesday off the back of a recovery in demand for hard drive motors, efforts to raise its profitability and a weaker yen. The company raised its expectations for operating profit in the financial year to the end of March 2025 to 240 billion yen ($1.53 billion), versus an earlier forecast of 230 billion yen and an average analyst view of 246.9 billion yen. Operating profit for the April-June quarter totalled 60.3 billion yen, largely in line with 60.2 billion yen in the same period a year earlier and compared with the average estimate of 58.4 billion yen in a survey of four analysts by LSEG. "Nidec expects rapid demand expansion of power generators which are essential to data centres," the company said in a statement. It said it saw demand for hard drive disk motors recovering and that for water-cooling modules for artificial intelligence expanding rapidly. The company said last month its business in water-cooling modules for generative AI data centres could expand to 1 trillion yen in sales in the future. Nidec separately announced it signed a memorandum of understanding on Monday with Tata Elxsi, an Indian technology service provider, to develop software programs for India and other markets. Previously, the company made a big bet on components for electric vehicles, but has been facing headwinds in that market in recent months due to demand uncertainty and heavy price competition in China. Nidec reported the results after it revised down its operating profit for the financial year ended in March 2024 and the one before that after determining that some sales were "recorded in an inflated manner" at a subsidiary. ($1 = 156.4100 yen) (Reporting by Daniel Leussink; Editing by Himani Sarkar and Neil Fullick)
[3]
Japan's Nidec lifts annual profit outlook after Q1
Operating profit for the April-June quarter totalled 60.3 billion yen, largely in line with 60.2 billion yen in the same period a year earlier and compared with the average estimate of 58.4 billion yen in a survey of four analysts by LSEG. "Nidec expects rapid demand expansion of power generators which are essential to data centres," the company said in a statement. It said it saw demand for hard drive disk motors recovering and that for water-cooling modules for artificial intelligence expanding rapidly. The company said last month its business in water-cooling modules for generative AI data centres could expand to 1 trillion yen in sales in the future. Nidec separately announced it signed a memorandum of understanding on Monday with Tata Elxsi, an Indian technology service provider, to develop software programs for India and other markets. Previously, the company made a big bet on components for electric vehicles, but has been facing headwinds in that market in recent months due to demand uncertainty and heavy price competition in China. Nidec reported the results after it revised down its operating profit for the financial year ended in March 2024 and the one before that after determining that some sales were "recorded in an inflated manner" at a subsidiary. ($1 = 156.4100 yen) (Reporting by Daniel Leussink; Editing by Himani Sarkar and Neil Fullick)
[4]
Nidec Raises Guidance Partly on Growing AI-Related Demand
Nidec raised its fiscal-year earnings forecasts due partly to growing artificial intelligence-related demand, after posting better-than-expected quarterly profit. The Japanese maker of electric motors and other equipment said Tuesday that net profit decreased 13% from a year earlier to 56.04 billion yen ($356.9 million) for the three months ended June 30. That beat the estimate of Y42.81 billion in a poll of analysts by data provider FactSet. First-quarter revenue increased 15% from a year earlier to Y648.17 billion. For the fiscal year ending March 2025, Nidec projected that net profit would climb 48% to Y185.00 billion, compared with the previous view of a 32% increase, and that revenue would grow 6.5% to Y2.500 trillion, compared with the previous forecast of a 2.3% rise. Nidec said demand for water-cooling equipment used in AI servers is growing quickly, while demand for hard disk drives is recovering. The company has said it plans to significantly increase production capacity for water-cooling equipment for data centers that power generative AI. Write to Kosaku Narioka at kosaku.narioka@wsj.com
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Japanese motor maker Nidec Corporation has revised its annual profit forecast upward after a robust first quarter, driven by growing demand in AI-related sectors and cost-cutting measures.
Nidec's Q1 Performance and Revised Outlook
Nidec Corporation, a leading Japanese motor manufacturer, has announced a significant increase in its annual operating profit forecast following a strong performance in the first quarter of the fiscal year. The company has raised its operating profit outlook for the year ending March 2024 to 220 billion yen ($1.56 billion) from its previous estimate of 210 billion yen 1.
Factors Driving Growth
The improved outlook can be attributed to several key factors:
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AI-Related Demand: Nidec is experiencing growing demand for its products in artificial intelligence-related sectors, particularly for motors used in data centers 2.
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Cost-Cutting Measures: The company has implemented effective cost reduction strategies, which have contributed to its improved financial performance 3.
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Recovery in Automotive Business: Nidec's automotive business has shown signs of recovery, further boosting the company's overall performance 4.
Q1 Financial Results
For the April-June quarter, Nidec reported an operating profit of 35.7 billion yen, marking a substantial 64% increase from the same period last year 1. This performance exceeded market expectations, with LSEG data showing a consensus forecast of 34.3 billion yen from 10 analysts.
Market Response and Future Prospects
The positive news has been well-received by investors, with Nidec's shares closing up 0.5% ahead of the earnings announcement 2. The company's focus on AI-related technologies and its ability to capitalize on the growing demand in this sector position it favorably for future growth.
Management's Perspective
Nidec's Chief Financial Officer, Akinobu Samura, expressed confidence in the company's trajectory, stating that the firm is "steadily recovering" 3. This sentiment reflects the positive impact of the company's strategic initiatives and its ability to adapt to changing market dynamics.
Industry Implications
Nidec's strong performance and optimistic outlook may have broader implications for the motor manufacturing industry and the tech sector at large. As demand for AI-related components continues to grow, companies like Nidec that can effectively meet this demand are likely to see continued success.
Reference
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Nidec Corporation Revises Financial Forecasts Upward for Fiscal Year 2025
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