Nidec Corp. has raised its annual outlook and said it will buy back shares after reporting quarterly profit and sales that topped analysts’ estimates, underscoring strong demand for motors by automakers and other companies seeing higher sales due to the pandemic.
The Japanese manufacturer raised its operating income forecast for the current fiscal year, which runs to March, to ¥155 billion ($1.5 billion), up from the prior outlook of ¥140 billion and an average projection by analysts of ¥149 billion. The ¥50 billion share repurchase, lasting a year, represents as much as 0.68% of the company’s stock, the firm said in a statement Monday.
Nidec, a key supplier in the global electric-motor industry, is attracting increased attention amid the shift to electric vehicles. The company is betting that the skills it has developed building high-quality, precise and affordable motors, which have made it the supplier of 85% of the world’s hard-disk drives, can be used to equipped automakers with traction motors, the most important component in EVs after the battery.
Over the most recent three-month period, Nidec has attracted 15 new inquiries about its EV motors, Nidec’s President and Chief Operating Officer Jun Seki said at a briefing Monday.
The company’s automotive segment, which includes its EV motor business, reached a record high in terms of sales for the April to December period. As the company is aiming for ¥10 trillion in net sales by fiscal 2030, “we’re going to achieve record highs each period going forward” in the automotive segment, he said.
Jefferies initiated coverage of Nidec with a buy rating last week, saying it was “one of the most competitive players” in the supply of related motors. Of the 25 analysts tracking the stock, 23 rate it a buy, while two have assigned a sell rating.
Nidec is trying to make its traction motors the de facto standard for EVs, similar to Intel’s positioning for PCs, wrote Jefferies analyst Yoshihiro Azuma in a report. Nidec should become the de facto standard “simply because Nidec can mass-produce better motors at lower cost than others including auto OEMS,” he wrote.
Shares of Nidec are up 10% this year, following a 73% jump in 2020, giving the company a market value of ¥8.5 trillion.
As many people in industrialized countries stay at home, complying with initiatives to curb the spread of COVID-19, appetite for appliances, technology products and air and heating systems have fueled greater demand for electric motors.
At the same time, Nidec has been pushing deeper into the automotive sector, with powertrain products as well as motors for steering, air conditioning and other mechanicals that are being decoupled from combustion engines as carmakers seek greater fuel economy.
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