Restated accounts, impairment and excess distributions at NIDEC

analysisNIDEC's annual securities report for fiscal 2025 (year ended 31 March 2026), filed on 30 September 2026, reports consolidated (IFRS) revenue of ¥2,708,705 million and an operating loss of ¥518,978 million, after impairment losses on non-financial assets of ¥632,135 million. The loss before income taxes was ¥496,214 million and the loss attributable to owners of the parent ¥564,624 million. Equity attributable to owners of the parent fell to ¥794,164 million at 31 March 2026, 25.6% of total assets of ¥3,107,621 million, from a restated ¥1,239,815 million (42.5%) a year earlier. PwC Japan expressed a disclaimer of opinion on these figures, and NIDEC's presentation of 1 October 2026 states that the financial information may be revised if further material misstatements are identified. ^{1 2}

analysisConsolidated short-term borrowings rose by ¥493,316 million during fiscal 2025 to ¥587,026 million at 31 March 2026, mainly yen-denominated bank loans, and NIDEC's presentation of 1 October 2026 shows consolidated cash and cash equivalents of ¥852.2 billion at that date, against ¥246.3 billion a year earlier. The investigation itself carried a cost: the annual securities report puts the costs of the investigations by the Third-Party Committee and outside lawyers and accountants, of correcting the accounts and of additional audit fees for several periods at ¥30,522 million for fiscal 2025, and expects the final amount to rise because improvement work supported by outside experts is continuing. The consolidated note says the amount was recorded in selling, general and administrative expenses for both the group and the parent company, whereas the parent's income statement shows the same ¥30,522 million as 'special investigation costs, etc.' under extraordinary losses; the report does not comment on the difference. ^{1 2}

analysisTwo matters were still open when the report was filed. As subsequent events, it discloses that in September 2026 NIDEC signed a memorandum with a customer amending a contract in the AMEC segment's automotive inverter business, shortening the supply period and reducing the committed volume; this is expected to reduce the related provision for contract losses but to require a provision for claims from raw-material suppliers, and the effects were still under investigation at the filing date. It also reports that some US subsidiaries had applied for refunds of about US$70 million of tariffs imposed under the International Emergency Economic Powers Act after the US Supreme Court held them invalid, with the amount and timing of any refund not yet determined. ¹

analysisThe notes to the consolidated financial statements break the fiscal 2025 impairment losses on non-financial assets down by reportable segment: ¥298,800 million in ACIM, ¥189,699 million in the group companies business, ¥116,287 million in MOEN, ¥18,387 million in AMEC, ¥7,027 million in the machinery business and ¥1,935 million in SPMS, a total of ¥632,135 million. The ACIM segment reported an operating loss of ¥289,333 million for the year. For comparison, the restated total for fiscal 2024 (year ended 31 March 2025) was ¥122,869 million, of which ¥95,277 million was in the machinery business. ¹

analysisBy cash-generating-unit group, the notes attribute the largest losses to ACIM (¥298,800 million, including goodwill of ¥116,674 million), where profitability fell owing to excessive competition in home-appliance motors in China; to Nidec PSA eMotors (¥116,287 million), owing to slower growth in electric vehicles; and to Nidec Mobility (¥73,126 million), owing to weaker profitability of its North American business. Nidec Instruments (¥56,072 million), Nidec Powertrain Systems (¥28,123 million) and Nidec Techno Motor (¥26,801 million) follow. NIDEC's presentation of 1 October 2026 gives the three largest items as ¥298.8 billion, ¥116.3 billion (¥116.2 billion on another slide) and ¥73.1 billion within a total of ¥632.1 billion, and states that, because of these significant impairment losses at consolidated subsidiaries, the parent company recognized significant impairment losses on shares of subsidiaries and investments and provisions for doubtful accounts on receivables from subsidiaries. ^{1 2}

analysisNIDEC's documents do not agree on the exact consolidated total. The notes show ¥632,135 million across reportable segments plus ¥85 million on corporate buildings not attributable to any segment. PwC Japan's audit report, as reproduced in the annual securities report and in NIDEC's English-language notice of 30 September 2026, states ¥632,221 million; NIDEC's Japanese-language notice of the same date reproducing the audit report states ¥632,220 million; and the 1 October 2026 presentation gives ¥632.1 billion. The reviewed documents do not reconcile these figures. ^{3 1 4 2}

analysisThe company and its auditor describe the impairment tests differently. At NIDEC's press conference of 1 October 2026, according to a transcript published on a blogging platform, executive officer and acting chief financial officer Kazuo Nakagawa said that the tests had been calculated by NIDEC's in-house accounting team without external advisers, using the usual mechanism although assumptions and future plans vary from time to time, and that under the normal procedure the results were reviewed by and explained to PwC before being reflected in the accounts. PwC Japan's audit report states that it had not obtained sufficient appropriate audit evidence on the reasonableness of the impairment estimates. At the same press conference, according to the transcript, PwC's representative explained that this concerned both the amount of the losses and the year in which to record them, so that PwC could not judge whether the losses NIDEC recorded had been calculated appropriately under the accounting standards. ^{5 2 3}

analysisThe scale of impairment also changed over time. In its presentation of 3 March 2026 NIDEC said that additional impairment losses might have to be recognized as derivative effects of downward revisions to past years' results, mainly on goodwill and fixed assets of the automotive business, with assets of approximately ¥250 billion under impairment review and the amount and timing still to be determined; it also said it would promptly file amended securities reports for past fiscal years once the Third-Party Committee's investigation was completed. The restated prior-year figures presented on 1 October 2026 include ¥288.0 billion of impairment losses as a secondary impact, and at that day's press conference the acting CFO said, according to a transcript, that the ¥250 billion of impairment NIDEC had announced it expected had ultimately come to ¥288.0 billion. ^{6 2 5}

analysisA Japanese business-weekly report of 6 October 2026 linked the ¥250 billion to a different figure, stating that the impairment loss NIDEC had initially announced as ¥250 billion had grown to about ¥632.1 billion, resulting in a net loss of ¥564.6 billion for the year ended 31 March 2026. In NIDEC's own account the two figures refer to different things: about ¥250 billion was the scale of assets under review for effects on past years, which NIDEC said at its press conference of 1 October, before the report and according to a transcript, had ultimately come to ¥288.0 billion of prior-year impairment in its restated figures, while the ¥632.1 billion relates to fiscal 2025 itself. The report also called the fiscal 2025 disclaimer the third in a row, after those on the annual securities report for the year ended 31 March 2025 and the semi-annual report for April-September 2025; the semi-annual report received a disclaimer of review conclusion rather than an audit opinion. ^{7 6 1 2 5}

analysisNIDEC's annual securities report for fiscal 2025 states that, based on the Third-Party Committee's final report, which included a self-inspection of 288 group companies covering fiscal 2019 to the first quarter of fiscal 2025, it retroactively restated misstatements arising from improper accounting through fraud and error at numerous bases, including errors previously left uncorrected on materiality grounds, and also corrected misstatements in its fiscal 2025 statements. The report puts the effect on consolidated operating profit at +¥66,201 million for fiscal 2025 and −¥109,615 million for fiscal 2024, and the cumulative effect on consolidated net assets at the end of the second quarter of fiscal 2025 (30 September 2025) at −¥482,457 million. PwC Japan disclaimed an opinion, stating that it could not determine the appropriateness and completeness of the restated amounts. ^{1 2}

analysisFor periods before fiscal 2024 (the report's 52nd period), the report reflects the cumulative effect of the improper accounting and related corrections in opening retained earnings for fiscal 2024, reducing them by ¥356,433 million in the consolidated accounts and by ¥129,778 million in the parent company's accounts. It says those earlier periods include the 46th period (year ended 31 March 2019) as part of the self-inspection period, whereas its account of the restatement basis states that the self-inspection covered fiscal 2019 (year ended 31 March 2020) to the first quarter of fiscal 2025, one year more than the Third-Party Committee's investigation period; the report does not reconcile the two. ¹

analysisFor fiscal 2024 (year ended 31 March 2025), the report restates consolidated operating profit from ¥237,837 million to ¥128,222 million, profit attributable to owners of the parent from ¥164,159 million to ¥84,672 million, and equity attributable to owners of the parent from ¥1,716,947 million to ¥1,239,815 million, a reduction of ¥477,132 million. Total assets fall from ¥3,315,253 million to ¥2,919,765 million, while revenue changes only from ¥2,607,813 million to ¥2,606,347 million. The 'before restatement' figures differ slightly from those in the annual securities report originally filed on 26 September 2025, which reported profit attributable to owners of the parent of ¥164,365 million and equity attributable to owners of ¥1,717,149 million; the reviewed documents do not explain the whole difference. ^{1 3}

analysisNIDEC's presentation of 1 October 2026 measures the restatement, which it says covers the fiscal years ended 31 March 2021 to 31 March 2025, in total net assets: at 31 March 2025 they fall by ¥476.9 billion, from ¥1,743.6 billion to ¥1,266.7 billion, and the equity ratio from 51.8% to 42.5%. The presentation breaks the reduction into corrections based on the Third-Party Committee's findings (−¥208.0 billion), prior-year impairment losses recognized as a secondary impact of the restatement (−¥288.0 billion), reversal of depreciation and amortization (+¥42.3 billion) and re-examination of accounting treatments (−¥23.2 billion). The annual securities report, which uses equity attributable to owners of the parent, gives the reduction at the same date as ¥477,132 million. ^{4 1}

analysisOf the ¥288.0 billion of prior-year impairment, the largest item in the presentation is ¥204.2 billion in the automotive (AMEC) business in fiscal 2022 (year ended 31 March 2023). The presentation lists the Nidec Drive Technology group (NDTC-G, machinery and automation) at ¥76.8 billion among the major impairment losses, while another slide shows an NDTC-G impairment of ¥95.3 billion for fiscal 2024, and it does not reconcile the two. Cumulative consolidated operating profit for fiscal 2020-2024 falls from ¥819.9 billion to ¥437.3 billion, and fiscal 2022 changes from an operating profit of ¥89.9 billion before correction to a loss of ¥135.3 billion after it. That 'before correction' figure differs from NIDEC's original annual securities report of June 2023, which reported fiscal 2022 operating profit of ¥100,081 million, including an operating loss of ¥64,663 million in the AMEC segment; the corrected fiscal 2022 report filed on 24 May 2024 was not among the reviewed documents. ^{4 5 6}

analysisThe restatement reaches further back. Profit attributable to owners of the parent as shown in the report filed on 26 September 2025 was ¥135,759 million for fiscal 2021, ¥36,982 million for fiscal 2022 and ¥124,455 million for fiscal 2023; the fiscal 2025 report restates these to ¥107,398 million, a loss of ¥163,826 million and ¥98,352 million respectively. Restated equity attributable to owners of the parent at 31 March 2023 is ¥1,006,901 million, against ¥1,346,565 million in the September 2025 report. Those September 2025 figures are not necessarily the ones first published for each year: for fiscal 2022 the September 2025 report shows revenue of ¥2,230,027 million, whereas the original report for that year showed ¥2,242,824 million. ^{3 1 5}

analysisNIDEC's estimates of the effect changed as the investigation progressed. On 3 March 2026, with the Third-Party Committee's investigation still under way, it estimated that correcting the misconduct and errors identified to date would reduce consolidated net assets at the end of the first quarter of fiscal 2025 by approximately ¥139.7 billion. A NIDEC web page on the case that refers to the committee's final report of 17 April 2026 gives an expected reduction of about ¥160.7 billion at the same date. The fiscal 2025 annual securities report then gives a cumulative effect of −¥482,457 million on consolidated net assets at the end of the second quarter of fiscal 2025 (30 September 2025). These are interim estimates made at different stages and for different dates, and the last forms part of the restated accounts on which PwC Japan disclaimed an opinion. ^{7 1 8}

analysisThe parent company on its own (non-consolidated, Japanese GAAP) reported for fiscal 2025 net sales of ¥273,452 million and ordinary profit of ¥120,030 million, but a net loss of ¥167,003 million after extraordinary losses of ¥331,367 million. Its net assets fell to ¥18,976 million at 31 March 2026 from a restated ¥202,984 million a year earlier, an equity ratio of 1.0%. No dividend per share is shown for the year: NIDEC decided on 23 October 2025 to pay no interim dividend and on 3 March 2026 to forgo the year-end dividend. ^{1 2 3}

analysisNIDEC's notice of 30 September 2026 itemises the parent's extraordinary losses for fiscal 2025, rounded to units of ¥100 million, at ¥330.9 billion: special investigation costs (¥30.5 billion), valuation losses on shares of affiliates (¥183.5 billion) and on investments in affiliates (¥2.2 billion), provisions for doubtful receivables from affiliates (¥1.5 billion), for losses on guarantees (¥21.7 billion) and for losses on affiliates' business (¥28.4 billion), a provision for contract losses (¥6.8 billion) and a loss of ¥56.3 billion on extinguishment of tie-in shares from an absorption-type split, against extraordinary gains of ¥54.3 billion from reversals of provisions. The parent's income statement in the annual securities report gives total extraordinary losses of ¥331,367 million, including items not listed in the notice. NIDEC attributes the charges to the decline in some subsidiaries' net assets after their accounts were corrected, and states that all of them except the investigation costs and the contract-loss provision are eliminated in the consolidated accounts. ^{1 4}

analysisThe parent's schedule of provisions at 31 March 2026 shows a newly recognized provision for contract losses of ¥71,211 million, a provision for losses on guarantees of ¥24,528 million (¥2,931 million a year earlier), a provision for losses on affiliated companies' business of ¥28,397 million after the previous balance of ¥34,174 million was released, and an allowance for doubtful accounts reduced from ¥22,516 million to ¥4,177 million; the affiliated-business provision is recorded against affiliates' excess of liabilities over assets. The guarantees cover borrowings and other debts of subsidiaries, including Nidec PSA eMotors (¥20,584 million, up from ¥18,798 million a year earlier), Nidec Electric Motor Serbia (¥1,891 million) and Nidec GPM (Hungary) (¥870 million), with six further group companies guaranteed for between ¥6 million and ¥1,183 million each. ¹

analysisThe annual securities report lists the subsidiaries whose liabilities exceeded their assets by ¥10 billion or more at 31 March 2026: Nidec Automotive Motor Americas (¥41,416 million), Nidec Motors & Actuators (Poland) (¥23,132 million), Nidec Motors & Actuators (Germany) (¥16,300 million) and Nidec Electric Motor Serbia (¥15,346 million), together with three further subsidiaries in China and Europe with excess liabilities between ¥13,507 million and ¥36,564 million. These are balance-sheet figures for individual subsidiaries as listed in the parent's filing, not statements about insolvency proceedings. ¹

analysisThe parent's own earlier accounts were restated as well. For fiscal 2024 (year ended 31 March 2025), the fiscal 2025 report reduces the parent's operating profit from ¥9,324 million to ¥5,944 million, net income from ¥55,171 million to ¥48,888 million and net assets from ¥339,045 million to ¥202,984 million, a reduction of ¥136,061 million. It gives the effect of the corrections on the parent's operating profit as −¥1,219 million for fiscal 2025 and −¥3,380 million for fiscal 2024, and states that the internal investigations into quality issues and into trade and tariff matters had no effect on the parent's financial statements. ¹

analysisParent net income as reported in September 2025 was ¥45,079 million for fiscal 2021, ¥77,294 million for fiscal 2022 and ¥135,748 million for fiscal 2023; the fiscal 2025 report restates it to ¥36,705 million, ¥10,783 million and ¥118,578 million, and parent net assets at those year-ends from ¥250,330 million, ¥240,793 million and ¥339,520 million to ¥203,690 million, ¥128,185 million and ¥209,742 million. For fiscal 2022, NIDEC's original report had stated that no shares of, or investments in, affiliated companies without market prices had fallen more than 50% below acquisition cost at 31 March 2023, so no impairment was recognized; the 1 October 2026 presentation now shows a restated correction of −¥49.7 billion for 'valuation of shares in subsidiaries and associates, etc.' for fiscal 2022. ^{5 1 6 7}

analysisTaking into account the corrections to its own financial statements, NIDEC's annual securities report for fiscal 2025 states that distributions in five consecutive years exceeded the distributable amount calculated under the Companies Act and the Ordinance on Company Accounting: a share buyback of ¥31,413 million in the year ended March 2022; dividends and share buybacks totalling ¥94,014 million in the year ended March 2023, ¥41,244 million in the year ended March 2024 and ¥53,793 million in the year ended March 2025 (dividends ¥46,021 million and buybacks ¥7,772 million); and the ¥22,960 million dividend paid in the year ended March 2026, which was the year-end dividend for fiscal 2024 with a record date of 31 March 2025 and an effective date of 2 June 2025. NIDEC's presentation of 1 October 2026 gives different year-by-year figures, and the two documents do not reconcile them. ¹

analysisThe presentation explains the mechanism: reflecting the deterioration in group companies' net assets in the valuation of the parent's shares in subsidiaries and associates resulted in distributions exceeding the distributable amount for dividends based on the results of the fiscal years ended March 2021 to March 2025. It shows the parent's restated distributable amounts at those year-ends as ¥74.5 billion, ¥18.6 billion, −¥57.9 billion, ¥19.3 billion and ¥14.6 billion, against dividends and share repurchases in the following year of ¥92.6 billion, ¥94.0 billion, ¥41.3 billion, ¥53.8 billion and ¥22.9 billion, an excess of ¥18.2 billion, ¥75.4 billion, ¥99.2 billion, ¥34.5 billion and ¥8.3 billion. The corrections include provisions for subsidiaries' liabilities in excess of assets, shown as ¥58.8 billion for fiscal 2024; according to a transcript published on a blogging platform, the acting CFO told the press conference that several subsidiaries had fallen into negative net worth because of the corrections and impairment and put this provision at ¥58.6 billion, which the transcript notes differs from the slide. ^{2 3}

analysisAn earlier excess had already been disclosed in 2023. NIDEC's original annual securities report for fiscal 2022 (year ended 31 March 2023), listed in its IR library under 21 June 2023, stated that the interim dividend of ¥20,133 million resolved by the board on 24 October 2022 and share buybacks of ¥1,715 million in September 2022 and ¥6,883 million between 15 February and 20 March 2023 had exceeded the distributable amount under the Companies Act. It said NIDEC had commissioned an external investigation by outside lawyers, received its results on 16 June 2023 and would implement recurrence-prevention measures. Those 2023 disclosures concern the earlier episode; after the 2026 restatement, the fiscal 2025 report gives a larger total of ¥94,014 million of dividends and share buybacks in the year ended March 2023 that exceeded the distributable amount. ^{4 1 2 5}

analysisAccording to NIDEC's annual securities report for fiscal 2024 and its IR library, NIDEC had already filed corrected reports with the Kanto Local Finance Bureau on 24 May 2024 for its fiscal 2022 annual securities report (year ended 31 March 2023), its quarterly reports from the first quarter of fiscal 2022 to the third quarter of fiscal 2023 and its fiscal 2022 internal control report, followed by a corrected fiscal 2023 annual securities report on 25 June 2024 and a further corrected internal control report on 10 January 2025. The Third-Party Committee's supplementary report of 17 April 2026 states that the May 2024 corrections followed an overstatement of net sales at Nidec Drive Technology Corporation, which NIDEC described at the time as a misidentification of consolidation adjustments; the committee found that it was improper accounting performed intentionally to make results appear better, not an error. PwC Japan stated that the 25 June 2024 correction was filed because of an error in its own audit and internal control audit report. ^{1 2 3 4}

analysisNo corrected annual securities report for the restated years appears in the filing lists reviewed. The fiscal 2025 report's list of documents filed with the Kanto Local Finance Bureau from 1 April 2025 to the filing date, which covers the fiscal 2024 annual securities report and internal control report (26 September 2025), the semi-annual report (14 November 2025), amended shelf registration statements, extraordinary reports and share buyback reports, includes none; nor does NIDEC's IR library, in a version already listing the 30 September 2026 report. NIDEC had said on 3 March 2026 that it would promptly file amended reports after the committee's investigation; its 1 October 2026 presentation describes the restated prior-year figures as submitted together with the delayed fiscal 2025 report, and PwC Japan's audit report states that the reports up to fiscal 2024 have not been corrected. Absence from these lists does not show that no correction was filed after they were compiled. ^{5 1 6 7 8}

analysisNIDEC's presentation of 1 October 2026 states that it evaluated its internal control over financial reporting as not effective as of 31 March 2026, citing weaknesses in management oversight and control, material risk reporting, the independence and check function of accounting, the internal audit function, control over accounting policy and process, and trade management, and that the material weakness concerning the FIR tariff issue identified a year earlier had not been remediated. PwC Japan's internal control audit report describes NIDEC's internal control report as stating that the company is unable to express the results of its assessment as of 31 March 2026 and that material weaknesses exist in entity-level, financial closing and reporting, and business-process controls. The internal control report itself was not among the reviewed documents; 'not effective' is the presentation's wording and 'unable to express the results of its assessment' the auditor's description. ^{8 6 5}

analysisThe annual securities report also states that, in connection with the correction of the misstatements, NIDEC may become subject to an investigation by the authorities and to an administrative monetary penalty payment order for violating disclosure regulations under the Financial Instruments and Exchange Act, that it will cooperate appropriately with any investigation, and that the effect cannot yet be reasonably estimated and is not reflected in the consolidated financial statements. This is NIDEC's own assessment of a possible consequence; it does not say that any investigation has begun or that any order has been issued. ⁵