(March 3): Nidec Corp said it may book up to ¥250 billion (US$1.6 billion or $2.03 billion) in impairment charges as the world’s largest manufacturer of precision motors looks to tally the cost of an accounting scandal that’s seen its founder effectively cut ties with the company.
Nidec also warned there could be additional charges that would impact its past financial results. A third-party investigation into suspected accounting irregularities is ongoing, the company said Tuesday, without disclosing a timeline for the release of its revised financial reports.
Nidec has been embroiled in a crisis since June when it disclosed accounting issues spanning subsidiaries in Italy, Switzerland and China, as well as its car inverter business. As the scandal grew, so did the fallout: the company delayed financial results, had its credit rating downgraded and is at risk of being delisted.
Chief executive officer Mitsuya Kishida, who has been tasked with navigating the fallout of the scandal, will forfeit his base salary until he’s submitted a plan to overhaul Nidec’s corporate governance, the company said.
Nidec won’t pay a year-end dividend. Revenue rose 3.9% to ¥678 billion in the three months ended Dec 31.
The crisis has already seen founder Shigenobu Nagamori, whose unyielding focus on performance has been blamed for the scandal, relinquish his post as chairman emeritus last week. He left the board in December, though he remains Nidec’s largest individual shareholder.
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The stifling effects of this leadership style were revealed in late January, when Nidec published an 80-page report describing a workplace where the importance placed on short-term profit and an intolerance for missed targets made it difficult for workers to speak out.
The leadership exodus continued Tuesday, with Nidec chairman Hiroshi Kobe resigning effectively immediately.
An internal probe into a payment of approximately ¥200 million by Nidec Techno Motor in Zhejiang spurred concern that group companies arbitrarily decided when to write down risky assets with management’s knowledge, necessitating an objective third-party probe.
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The cases have bogged down auditors assessing the company’s finances, delaying the submission of its financial results and seeing Moody’s Ratings downgrading the company’s debt three levels to junk.
Nidec’s stock has been removed from the benchmark Nikkei 225 index and the Tokyo Stock Exchange has said it may delist the company if it can’t show an improvement in its internal management.
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