Now we will start the press conference on the change of president and accounting closing results. First, I would like to introduce today's attendees and presenters. First, Mr. Michio Kaida, who assumed the position of president on September 29th. Also present is Mr. Soichiro Sakuma, the chairperson of the company's board of directors meetings. And also present is Mr. Masayuki Minai, who assumed the position of representative director and senior vice president on September 29th, and Mr. Kazuo Nakagawa, vice president and acting chief financial officer. I am Keita Watanabe of the company's corporate communications department. I will serve as today's moderator. We will later welcome and introduce Mr. Masataka Kubota, deputy chief executive officer of PricewaterhouseCoopers Japan LLC, which is responsible for auditing our group, and Mr. Yoshihisa Chiyoda, the chief auditing officer of the same company. First, I will explain today's agenda.
First, Mr. Minai will deliver the opening remarks. Next, Mr. Minai and Mr. Sakuma will explain the circumstances surrounding the change of president, followed by greetings from the new president, delivered by Mr. Kaida. After that, Mr. Kubota and Mr. Chiyoda of PricewaterhouseCoopers Japan LLC will take the stage and explain the disclaimer of opinion in the audit report for the first fiscal year ended March 2026. Then Mr. Nakagawa will explain the account closing contents. After that, we would like to have a question and answer session. Please ask your question at the time. Now, Mr. Minai give us his remarks.
I am Minai, representative director and senior vice president. On September 26th, we reported a change in the company's president.
As Mr. Mitsuya Kishida, the former president, resigned, and Mr. Michio Kaida, formerly first senior vice president, assumed the position of the president, while I, Minai, assumed the position of representative director and senior vice president. In addition to the fact that while addressing a series of accounting and equality issues and advising reform aimed at restoring trust, we have once again been placed in a situation where the top management has changed. In the consolidated accounting closing for the fiscal year that ended March 2026, we reported an impairment loss of approximately JPY 632.1 billion. Furthermore, regarding the fact that the audit opinion issued by the auditor in the securities report for the fiscal year that ended March 2026 was disclaimer of opinion.
We sincerely, deeply apologize for causing great concern and inconvenience to our many business partners, including our shareholders, investors, and members of the market community, as well as our business partners. We truly and sincerely apologize. We will explain the details after taking our seats. Thank you.
From this point onward, speakers will take their seats and Mr. Minai and Mr. Sakuma will explain the background of the change of the company's president, followed by Mr. Kaida's remarks as the new president. Please take a look at the slides. It was yesterday that we made this announcement. As of September 29th, we launched a new top management system. Under this new management, we will continue our efforts for our corporate reform to make a better Nidec. Once again, with respect to the new president, Mr. Michio Kaida is the person who assumed the position of president.
At the same time, I am going to be serving as the new Representative Director. With these two of us, we will lead this company's management. I would like to provide you with an explanation. Mr. Sakuma will give an explanation about the events leading up to the change of the president.
This is Sakuma speaking. I would like to provide you with an explanation of the change of the president. As you know, Mr. Kishida, former president, was subjected to the investigation by the Executive Responsibility Investigation Committee, and we, the board of directors, made necessary preparations for the possible replacement of the president. We discussed the emergency measures, including the replacement of the president with a new one. The nomination committee is led by Yamamoto-san. Koizumi, Nishimura, and Yoshii and I are the members of the nomination committee.
These are all outside members of the board of directors of this company. Under the leadership of Mr. Yamamoto, the chairperson of the nomination committee, we deliberated various relevant issues. As you can see on the news release, we used a third-party organization to select the appropriate candidate to replace Mr. Kishida. Eventually, after a series of interviews, we decided on these two people, and we submitted our proposals to the board of directors. On the meeting on the board of directors on September 29th, we decided on these two people as the top management of the company. It was a very unfortunate event, but during the fiscal year 2025 that ended March 2026, there was an impairment loss that exceeded JPY 600 billion.
As you can see in the news release, with respect to financial reporting, there was a report to the board of directors about inappropriate speeches and actions by Mr. Kishida, which we discussed. During the meeting, we asked Mr. Kishida's opinions. In the board of directors meeting, Mr. Kishida, the former president, left the meeting room. After that, we had the discussions on him, and we reached a unanimous decision to replace him with someone else. We reported the fact to Mr. Kishida, then he expressed his intention of resignation. Then we conveyed this resignation intention to the board of directors and nomination committee. Mr. Kishida submitted his resignation letter on the September 29th. On the same day, we held a board of directors meeting to decide a new president and a new Representative Director.
With respect to the absence or presence of legal liabilities, it is up to the decision to be made by the Executive Responsibility Investigation Committee. That is all from me. Thank you.
Next, I would like to have some words from Mr. Kaida, and he will give you some highlights from our company's financial performance as well.
This is Michio Kaida, who assumed the position of president on September 29th. As we move forward with addressing a series of announcing and accounting and quality issues, the situation has arisen once again in which the top management has changed. In particular, we take very seriously the fact that the overview surrounding our company is having a significant impact in many areas.
Having assumed this responsibility, I do understand and take seriously the fact that the current situation of this company has been causing a lot of anxiety and worry among our stakeholders. In order to regain the public's trust in Nidec, we will do our very best, which is my mission as president. What is important is we need to go back to the basics as a company. We need to secure very appropriate financial results.
We need to be able to train our people, make quality products, and we need to be regarding our human resources as the top best treasure for us as a company. We would like to continue to, once again, make quality products that are trusted by our people, our customers around the world. That is our utmost priority. In order to do that, we will continue our efforts. Thank you very much in advance for your support.
Now, allow me to give you and share with you the highlights of the financial results. Allow me to have a seat. Thank you. Thank you. I appreciate if we can browse your documents before you, and also it has been shared up on a screen. First of all, let me describe you some of the development. We corrected the inappropriate accounting practices, and we corrected fiscal year 2025. The Third-Party Committee was held and launched on September 3rd. After the annual securities report were announced for two times. This year, on April 11th, Third-Party Committee investigation report was sent to us back on April 17th. On June 30th, we extended submission due date of annual securities report.
Then we faced a- Before that, on September 30th, we submitted the annual securities report, but audit firm's audit opinion has a disclaimer of opinion. Fiscal year 2025 financial results. Since last year, business portfolio needed to be converted and also profitability needed to be ensured. What is to be in the future? That has been discussed internally in a structural reform and also conversion area. We look at the businesses, and we try to review the business portfolio. Then JPY 632.1 billion for impairment losses we had to recognize as a result. So JPY 2 trillion, JPY 708.7 billion of the sales and operating losses were made. ROE declined from 40% to 25-some percent here. As far as impairment loss is concerned, as you see on the right-hand side, mainly that is coming from home appliances and automotive related businesses were listed here.
However, our free cash flow is around JPY 98 billion. In other words, we have a healthy cash generation capability. Next page, please. Why we had to come to impairment loss. There are internal environment and also external environment. Internally, there were management practices we followed as we did conventionally. We try to pursue expansion of motor businesses as we founded the company with a motor, and we try to expand in omni-directional way. Not only that, the uniform performance management, and we solely focus on the short-term performance. That is the practices we followed in the past. But given the current business environment around us, as you know very well, for automotive, EV started to slow down and SDV started to accelerate now. That pushed up, that intensified the competitive landscape and then cost has increased.
Also in home appliance businesses, before COVID-19 pandemic, there was very brisk business environment. However, unlike that before, right after COVID-19 pandemic, demand started to seep and then that has become a commodity. That has become a commodity, and that has intensified competition. Given that environment, we had to go through the excessive CapEx, and that led to the excessive impairment losses we had to recognize. This is the guidance for fiscal year 2026. Let me be brief here. This fiscal year, sales will be JPY 2,800,000,000 . Operating profit is expected to hit JPY 200 billion. Progress in this first half, JPY 1.4 trillion. That is the sales, and also JPY 120 billion of the operating profit. That is the progress we made in the first half. Turn the page. Here is a skeleton of our management policy going forward.
As I touched a little bit of what it had been in the past, pursuing the scale and uniform performance management and solely focus on short-term performance, and we need to pivot ourselves to the future state. We need to change the portfolio, and also we need to run the businesses with ROIC.
Then we need to turn around the financial footing going forward, especially the huge impairment losses were recognized. So we need to go on the structural reform with no exceptions. Also, high level of growth and high profitability, that is where we would like to do. That is a quality change of the company. Under the new management system, we would like to formulate new mid-term management plan. Turn the page. Growth area resources need to be shifted, and I would like to talk about how we are going to do that. In Nidec, there are five pillars.
We call them as the five pillars. Left-hand side, home appliance, energy infrastructure, AI, semiconductor, and to the right, machinery tools, and last but not least, automotive. As you can see here, impairment losses appeared in home appliance and automotive, as you see up on the screen from left to right. So these resources in those areas needs to be reallocated to energy infrastructure, AI, semiconductor, and also machinery tools. That requires higher level of the precision. We would like to assign and reallocate resources in right fashion. So these are management resources need to go to the focused area. That is what we would like to do in the future. Next page, please. One of those core area, this is a high profitable growth area. I would like to share with you a little bit. Our founding business is our HDD component business.
The growth rate is expected to be 14%. Our share maintains the largest on a global scale. Recently, the AI market drives the water-cooling module. We expect to see robust demand here. Data center generators and BESS, and also a power conversion system. These areas of the businesses maintain the high level of the growth. Generator, BESS, battery storage system, and these are two businesses that enjoy the revenue growth of 40%, very high. Energy-related businesses will be where we would like to reallocate the resources going forward. Next page, please. Now, for the sake of obtaining the opinions from the audit, we are making efforts. The September 30th, there is a disclaimer of opinion from the audit firm, but already we work together with PwC while looking at the schedules.
At some point in October, we try to obtain the opinions of audit, and would like to solve the remainder issues. That is what we are working on at the moment. Let me be brief here in reporting with you of these performance. Can we move on? Yes. Here, PwC Japan, Kubota-san, and Chiyoda-san will come into the room, who are in charge of Nidec. I would like to introduce the speakers. Mr. Masataka Kubota, Deputy Chief Executive Officer of PricewaterhouseCoopers Japan LLC. Mr. Yoshihisa Chiyoda, Executive Officer and Chief Audit Service Officer of PricewaterhouseCoopers Japan LLC. You may have seat. Now, what will have you explain the disclaimer of opinion on the audit for the fiscal year ending in March 2026. Thank you in advanc.
Thank you so much. I am Kubota, PricewaterhouseCoopers Japan LLC, Deputy Chief Executive Officer. 2026 March financial results and also the report. We chose to have a disclaimer. Regarding that, along with the audit report, I would like to explain. First, disclaimer of opinion, which does not determine the mistakes in the report. Our audit firm in the report as a rationale, what is stipulated in the consolidated report, there could be an important impact. That is why sufficient and proper audit evidence was not gained. We decided to have a disclaimer. 2025 March and 2026 March audit report, both had a disclaimer, and the reasons are not the same. 2025 March, the third-party investigation was not completed and inappropriate accounting process. The range of that, and also what impact would that have to the financial statement. We were not able to obtain sufficient evidence.
Therefore, financial report overall properness, we could not make a judgment. That is why we had the disclaimer. On the other hand, 2026 March, different situation. The third-party survey and the quality issue and the tax issue, so survey is almost complete. We identified the reasons of the disclaimer. 2026 March in the audit report, the rationale of the disclaimer is stipulated as follows. A corporate governance-related topic, and impairment losses-related topic, and the others. Regarding the corporate governance topic, I want to explain. The company received the third-party report. In that, the company and group companies in various regional offices relating managers, there is the allowance booked was less, and then fixed cost was reduced, and the cost was inappropriately booked.
Furthermore, company and group associated company's manager or accounting person to get the auditor's agreement for there was an inaccurate or misleading information provided to the auditor, and the documents were hidden or revised. That was confirmed. The Third-Party Committee identified certain facts and inappropriate accounting materials were already revised. The company, in terms of the quality management, related investigations completed by the company and test exam record manipulation, those were confirmed. Also, trade dealing and other issues in survey investigations are finished, and the expenses and all those items are revised. However, inappropriate accounting, those were acknowledged. Members who had an untruthful comment to the auditors, we identified those members, and company's evaluation and HR treatment partially not completed as a result. Part of those employees.
As of now, in the company and group company, a consolidated financial report manufacturing process in that those are still holding responsible in their positions. Inappropriate account treatment, and these members need to be removed. The company looked into it and executed some actions by looking at the past five years accounting. In the limited time to respond with the audit, it requires a lot of time. That is a fact. For the company to execute this, related management members who did the appropriate actions, we make sure to have preventive actions. We require those members to support the accounting business. However, non-complete compliant cases or there are new cases to determine some inappropriate actions. As of September, in the financial reporting process, those members are still holding the responsible position. That was determined.
In the Third-Party Committee, items identified was that for many years, company and group company's governance environment, that unique feature became visible and there is the risk, which means the rule making and also controlling the rules. Those members who are in a position will overrule the rules. That risk is not considered, therefore company accounting governance and control. There are major concerns. This situation shows the management members got engaged in the inappropriate accounting practice, and it is also impacting the materials generated. From these management members, we obtained the audit evidence or statement. With these conditions, we are unable to trust them in terms of the audit. Our audit firm, the revision by the company or the revision needs to be done and inappropriate all those actions to be improved. Is that exhaustible or not?
Due to the risk, there is the potential major mistakes, whether those exist or not. If they do exist, the quality and the impact or the range of the impact, we couldn't make a judgment. Regarding the impairment loss. Our audit firm, the amount of the booked impairment loss, and then in what item that would need to be booked, is that appropriate or not? For that, we were unable to obtain the sufficient appropriate evidence. Besides inappropriate accounting practice. There are management members who could engaged in it. The evidence power about the impairment loss. There is a major impact. Also, a financial statement is not of this fiscal year only, but it includes the last year's financial statement. Comparison conditions is revised. With the inappropriate accounting practice. In the accounting standard, consolidated financial statement before the impairment.
Based on that, the fact and result that happened afterwards should not be used. Specifically speaking, cash flow forecast after the revision and also business plan, that is the basis for that. Those important items have to be before the revision public information. The information formulated afterwards should not be used, and the necessary explanation was not obtained sufficiently, and we couldn't obtain the appropriate audit evidence. Therefore, the impairment loss booked by the company is following the standard of the accounting. Is that appropriate or not? We couldn't make the judgment. Therefore, comparison information, as I stated in our corporate governance, improper accounting practice. Those management members engaged in that so stipulated the FY 2025 March manufacturing generating process. Those members are taking responsible in their position. Therefore, 2025 March numbers and also consolidated financed statement.
Those amount is appropriate or not, we couldn't make a judgment.
With respect to their consolidated financial statements, we weren't able to obtain enough and sufficient evidence to prove its contents. This impact, we determined it was going to be very large. Yet, given the number of those issues in existence, we believe that such impact will be over the entire financial statements, consolidated financial statements. Therefore, we weren't able to determine whether to decide those impacts will be on all over the consolidated statements or not. As I've stated already, with respect to inappropriate accounting practices, the range of responsibility is yet to be determined. We weren't able to assess the exact impact of those inappropriate accounting practices on the company's consolidated performance. Therefore, PwC Japan wasn't able to perform sufficient auditing activities. This is why we gave the disclaimer of opinions to Nidec's consolidated financial statements.
We needed to express our opinion as the auditing firm regarding. We are an independent auditing firm, and we do fulfill the responsibility as such. With respect to this latest, to disclaimer opinion on Nidec's financial statements, these are all based on applicable rules. We needed to, but we couldn't obtain. We weren't able to obtain enough and comprehensive, sufficient evidence about Nidec's financial performance. PwC Japan, based on our responsibility as an auditing firm, made this decision. This concludes our presentation on the reasons for the disclaimer of opinion on Nidec's financial statements. With respect to this disclaimer of opinion, this is for the Nidec's financial situation as of the end of March 2026. We would like to fulfill our responsibility as an auditing firm. We will continue to work and discuss with Nidec as we go forward to discuss and address these issues. That concludes my presentation. Thank you.
Thank you very much for your presentation.
Lastly, Mr. Nakagawa will present you with the company's financial performance statement for this fiscal year. It was yesterday that we released this financial information, and we would like to provide you with some main points. First of all, we have covered five fiscal years, starting from five years ago until the end of March this year. We have disclosed our information up to Q2 or second quarter of this fiscal year, and the third-party investigation period is from fiscal year 2020 until the 1st of fiscal year 2025. So there is a gap between our period and their period, but our period covers five fiscal years. Please make necessary adjustments. I believe that way all the figures will make sense to you. First of all, with respect to the amount over here, the net assets has decreased by JPY 476.9 billion.
Of that amount, the amount coming from the inappropriate accounting practices is JPY 208.0 billion. We have some impact of JPY 288 billion. Back on May 13th, we have made a presentation to you all.
The third party's figure was JPY 160 billion. We will explain to you the gap using the chart. It is based on the difference of the periods between the two sides. JPY 288 billion is the amount of impairment losses incurred. This is the breakdown of the corrections we have made. Prior to the corrections, the amount was JPY 819.9 billion. We have had some points pointed out by the Third-Party Committee, and that amount pointed out was JPY 174.2 billion. Impairment losses was JPY 288 billion, and amortization and depreciation was + JPY 123 billion. We have had some re-inspection of the accounting process, which is + JPY 373 billion. You can see the corrected amount is - JPY 382.6 billion. Operating profit after the corrections were made was JPY 473.3 billion. There is no major impact on our financial performance. You can see the cumulative amount.
You can see the cumulative total on the far right of the chart over here. You can see the breakdown of the amount that I have just mentioned. JPY 288 billion is the amount of the impairment losses, and the majority of which comes from the automotive business, JPY 4.2 billion. JPY 76.9 billion, which is something that I would like to explain later in detail. The next page is about our balance sheet. You can see the comparison between before and after corrections were made. On to the right-hand side, you can see the final amount of money impact. You can see the JPY 1.7436 trillion for the net assets before the corrections. After the corrections, the number is negative JPY 404.769 trillion in net assets. After the corrections, JPY 12667, as you can see, billion yen . You can see the major causes for the impairment losses.
AMEC automotive business is the top one that I would like to mention. JPY 204.2 billion. This business is concerning the electronic power steering, electronic brake pump, and other products. We have made capital expenditures to expand our business there. But there have been some changes in the EV market, and we have an emergence of Chinese manufacturers as our rivals. There has been a demand from our customers, and the Chinese suppliers became increasingly competitive. Because of that, our competitiveness declined. Under such circumstances, we would increase our share according to our plan, but there was a mismatch whose gap has increased with reality, and our competitiveness was going to become less and less. Because based on that decision, we recorded the impairment loss. The next one is about Nidec Drive Technology Corporation, which is handling reducers, press machines, among other products.
As a latecomer into the market, we were very active in the business activities, but due to the intensive competition with our Chinese rival manufacturers, and we have had an increase in the cost regarding our European businesses, we started struggling in this business. We have had a press machine business. As you can see, we have had an increase in the inventory of our products in the business. In fiscal year performance, some struggles became clear. Therefore, we decided to have this adjustment, as you can see on the bottom right-hand side of the slide. On to the next slide. You can see the net assets for Nidec Corporation alone. With respect to Nidec Group companies, you can see some impairment loss cost figures. You can see the reserve. Due to impairment losses, we have had excessive debt of some of our group companies.
Here you can see some reserves, JPY 58.6 billion. Here you can see the correction-related impact as JPY 1.361 billion negative. You can see the distributions-related figures there. As you can see on the slide, since fiscal year 2021. You can see the increase in the numbers from - 383 to - 466, and 1126, 1298, and then negative 1361. Unfortunately, for all these five fiscal years, we exceeded the distributed amount. Next, we would like to talk about the financial performance for this fiscal year.
As Kaida-san said, JPY 3,708.7 billion of the revenues and operating profit, you see because of the partially driven by the impairment losses. Operating losses were JPY 519 billion. Some of the highlights for revenues. MOEN, which includes appliances and commercial industrials. There was a brisk demand for data center in North America, and the alternator is leading the revenues, which is very robust. So 3.9% growth from the previous year. Operating profit.
As I repeatedly saying, there are significant impairment losses booked, so JPY 519 billion of the operating losses. Other topics on the right. As a consolidated subsidiary, Nidec needed to recognize a huge amount of the impairment losses. Therefore, parent company, Nidec, needed to recognize huge impairment losses. As we talked about the year ending in March 2025, but the same applies to this fiscal year too. Here, this is a comparison. You see variables in each item.
As I attached, free cash flow, the year ending in March 2025, it was JPY 136.8 billion. It declined, but still, we are able to ensure JPY 98 billion of the free cash flow. That's part of the free lights you might want to pay attention. I would like to spare a few minutes in talking about what are the major impairment losses. JPY 600 billion plus of the impairment losses, and all which ACIM, which includes home appliance, commercial, industrial, commands a lot. As Kaida-san already reported, home appliances related to supplying capacity were excessive, so utilization ratio and supplying capacity have been down to 50%. There is excessive competition going on in China. In industrial motor businesses, there is a huge fixed cost.
Given the fiscal year 2025 as of the March 2026, the future profitability and future cash flow outlook have been a basis on the need to go through the structural reform, including production. That's why we needed to record major impairment losses. 13 of May, the portfolio review was discussed, and as you see, the product lineup as you see here up on the screen. Turning the page, NPe, Nidec PSA emotors. This sits in Europe, and E-Axle for EVs have been provided. This is joint venture, by the way. In the first place, EV market, high level of the growth, and there are major clients who are expanding their production. So we were making upfront investment for development and production facilities.
However, the growth of EV market is well below what we had expected them to be, and we are unable to secure significant shipment that we had expected to get, and that saps our profitability significantly. We have studied a lot, but the worsening performance and for the year ending in March 2027, budget declines. So we decided to recognize the major impairment losses and other fixed assets and the goodwill, both of them needed to be booked as impairment losses. Next one, NMOJ. This is part of the automotive market, automotive ECU and interior switch, DC-DC converter, and OBC power equipment have been handled in this part of the segment. Specific products in overseas businesses have confronted with operational challenges. The impact in the overall company-wide segment or business-wide profitability. We try to pivot ourselves for automotive electronics business.
Therefore, we are making development investment before it is too late, and that does have impact on the profitability. We already articulated structural reform based on business portfolio conversion. Based on the business reform that we had at the moment after review, we decided to recognize impairment losses. Goodwill and tangible fixed assets, almost all of them have to be recognized as impairment losses. We will go on to the next one, which is a little busy. Sorry. Fiscal 2024, 2025 comparison. After correction, operating profit, fiscal 2024. You see the operating profit, it does include huge impairment losses. You need to add that up to JPY 221 billion, which does exclude non-recurring factors. However, fiscal 2025, we have the -JPY 519 billion. Over JPY 600 billion of the impairment losses needed to be added to this. Excluding non-recurring factors, it says JPY 150 billion.
You see the variance in comparison between JPY 221 billion in fiscal 2024 and then JPY 150 billion in fiscal 2025. You see the comparison and factors in each segment. Unfortunately, the automotive and home appliance and machinery equipment segment, even though you exclude the one-off factors, the profits decline, revenues decline. For SPMS, there was an increase of the profit by JPY 4.4 billion. But JPY 4.2 billion of the costs across company-wide. This is a comparison of the balance sheet between the year ending in March 2025 and 2026. The highlights here are the total assets unchanged. However, as you see on the left-hand side, the huge impairment losses were made, so fixed assets declined by JPY 500 billion. But the cash on hands need to be ensured, need to be secured. So JPY 850 billion, some yen of cash were recognized here.
That is why JPY 600 billion increase. The total assets increased by JPY 187.8 billion to hit JPY 3 trillion 107.6 billion. As you see on the right, the net assets after correction and after impairment losses and so forth, JPY 1 trillion 266.8 billion. Our equity ratio 42.5%. That has been corrected to net assets of the JPY 764 billion and an equity ratio down to 25.6%. As you see, net debt bearing interest rates for the year ending in March 2025, JPY 392.9 billion. The year ending in March 2026, JPY 261.2 billion. It is net debt, but it is decreased by JPY 131.7 billion. It improved. Turning the page. As I already explained, year ending in March 2026, JPY 100 billion, that is a free cash flow.
This is also one of the factors included as a net debt improvement of the JPY 131.7 billion. You see the cash flow. It declined versus fiscal 2023, but still we have a great free cash flow of the JPY 98 billion. Still robust. Moving on to internal control assessment response as to financial reporting. You can see the slides, so I will appreciate if you can refer to them later. Anyhow, recurrence measures for internal control has been considered and responded across the company, and the improvement planning were about to be published on the confirmation letter for internal control to be published on 28th of October. We would like to include those factors as you see up on the screen. We are trying to study and incorporate that into action. After, we are going to get audit from audit firm after that.
2027 March. This period of business forecast. Sales amount of increased revenue, we aim for JPY 2, 078,000,000 . Sales profit is JPY 200 billion. The beginning half, 120, and latter half, 80 billion. Profit before income taxes, JPY 180 billion. The profit attributable to owners of the parent, JPY 100 billion. This is a forecast dividend. It is to be discussed. That was announced yesterday. This shows sales and operating profit. In the sales, there is non-booked items. This is the + JPY 91.3 billion revenue. Likewise, previous table, from the published numbers, amended numbers are mentioned here. FY 2025 minus loss of the JPY 500 billion and impairment loss impact, those are added back, JPY 150 billion. On the other hand, a sales profit of JPY 200 billion, there is non-regular ones, those are excluded. FY 2026 forecast is JPY 160 billion.
These are excluding the non-regular items. These are the most recent. JPY 2.8 trillion is the FY 2026 forecast and JPY 160 billion. This is the sales profit. Do you have questions? If you have a question, please state your name and affiliation. We can accept two questions per person so that we can receive as many questions as possible. We have time to accept online questions as well. Left-hand side. Male in front.
Kyoto Newspaper. I am Ashihara. Thank you for today. Question to President Kaida. Mr. Kaida. In this security report, there is the disclaimer of opinion. To maintain the listing, what is the situation? It is becoming very severe. What is your understanding about this? Could you please share that with us? By September 30th, PwC, together with them, every day we had a discussion on what is happening.
We have been tracing the situation, screening the situation. As I explained before, we would like to maintain our business. What must be done is fully understood. We have deadline in mind, and we would like to proceed forward so that we can gain the audit report.
Opinion, you want to obtain that. Is that unexpected that there is this disclaimer for you management people?
Naturally, we were taking time and what is the difference of the way of thinking. Eventually, as explained by PwC members, our understanding and PwC understanding, there was a little bit of a difference. We are trying to align our understanding, the way of thinking. By the end of October, that is the deadline. Time is limited.
During this one month, what are you going to particularly work on?
As PwC members previously explained what is lacking from our side, we fully understand that. One by one, we will clear that out. Sorry, two questions per person only. Maximum of two questions per person. Sorry. Apologize. Next person. The third from the left. Male in front.
Morgan Stanley. Morgan Stanley. I am Sato. Thank you for your presentation. First question. Yesterday, internal control report was issued. In that 2026 March, as of the end of that period, internal control was not working. That was the judgment. This one, as of October 1st, what will that be? Internal control is not taking effect as of now. Where it is there is no internal control? How would that be rectified by October 1st? You mentioned PwC pointed out about the HR related correction. Is that already completed?
Rectification's already completed or not?
Minai, I would like to answer this question. In the internal control report. Whether we can do this or not. This time, trade compliance misconduct, and other points. We are working on the improvement. Internal control confirmation report, we will submit that on October 1st. For that, we will proceed to improve fully to complete the improvement. Besides, this time, in the internal control report, the disclaimer was issued. The reason for that is that the people who engaged in the mispractice and who is impacting the improper accounting practices. About that, as explained by PwC, we will eliminate those practices. Financial result together, and internal control report together, we would like to obtain the audit opinion. We are starting to take concrete actions. What exactly we are going to do?
Now we are communicating and clarifying those items, and we will work on improving each one of them one by one.
Thank you for your comment. Second question, regarding the schedule going forward. By October 28, to the Tokyo Stock Exchange, you will submit the internal control confirmation report. As of the September 3 press conference, by November 13, the latter half accounting result, and then in December, five years interim plan will be presented. That's how you explained. Will this schedule be maintained or is there going to be a change in the schedule?
Minai speaking. In conclusion, no change in this schedule. We would like to follow this timeline. We are focusing on the timeline and preparing for that.
How about the humane rectification measures?
That will be completed by December.
Yes. Thank you very much.
The person on the right, please.
Thank you. This is Akita of The Nikkei newspaper. I would like to ask a question to Mr. Kubota of PwC Japan. You as the auditor said that you will fulfill your responsibility as an auditing firm, but the deadline is at the end of October. Is there going to be any other opinion in addition to, other than disclaimer of opinion, please? Thank you very much.
First of all, as I've said before, our responsibility as an auditing firm is to obtain sufficient and appropriate evidence for auditing activities, and we will provide an appropriate opinion as an auditing firm. Of course, this is related to internal management and preparations are on the way at this company, and based on the result of the activities, we will provide our opinion as an auditing firm.
According to your explanation, there have been some cases, some issues that have been identified in the process. Do you think everything will be possible to be done, made in time? I believe you're talking about the last month. You started this month.
There have been some issues identified during the last month of September, and because of that, we weren't able to express our qualified opinion. As has been explained by Mr. Minai a few minutes ago, the preparations are underway, including the schedule coordination.
Here's my final question. With respect to PwC, when is the right timing for you to. When did you decide that you wouldn't be able to provide Nidec with the qualified opinion? With respect to the communication between your firm and Nidec, is that related to the resignation of Mr. Kishida?
Nidec press office. This is Minai speaking once again. I would like to provide you with an answer to the question.
In certain countries, our auditing process, the accounting process became stagnant because of these issues, and we confirmed and checked those issues until the very last minute in the form of a discussion. We would try to solve those issues to the best extent possible. Up until the very deadline of September 30, we did our very best, but we couldn't solve all of these issues. That was the reality. Plus, with respect to Mr. Kishida, we had the issues with his resignation. That has nothing to do with these issues that I've just mentioned. Thank you.
Please raise your hand. Next question. Two questions per person at a time, please. The person over there. The second person from the right. Thank you. The person wearing glasses.
This is Kanai with Yomiuri Newspaper. Thank you.
I would like to ask you about the resignation of Mr. Kishida, the former president. There has been some inappropriate activities or speeches by Mr. Kishida about the financial reporting. Mr. Kishida would mention that everything will be up to the decision made by the Executive Responsibility Investigation Committee. Without waiting for such a decision to be made by the committee, Mr. Kishida seems to have resigned this time. Contrary to the explanation that had been provided prior, what type of a statement was made by Mr. Kishida? I believe this is something that your company's employees are very truly interested in. Please be detailed as much as possible.
Thank you very much for your question. This is Sakuma, the chairperson of the board of directors speaking.
As I've explained before, we have the nomination committee and the board of directors, and we decided the resignation of President Kishida will be necessary. It's truly unfortunate as a result. During the course of fiscal 2025, fiscal year, there was a huge amount of impairment losses incurred. That's one thing. This is something that I've explained already as well. As expressed in the news release, with respect to, there have been some inappropriate speeches and actions made by Mr. Kishida, which were reported to the board of directors. Based on that fact, we had a discussion among the members of the board of directors. With respect to the latest decision, it doesn't have to do with the legal responsibility at all. As expressed by one of you in the media, it is all based on the decision made by the Executive Responsibility Investigation Committee.
This factor remains unchanged. Mr. Kishida's decision of resignation has been decided independent of those other issues. With respect to the impairment loss of more than JPY 600 billion, Mr. Kishida, as the Chief Executive Officer, needed to decide the fate of himself as far as Mr. Kishida is concerned. Of course, this decision is made partially based on his past inappropriate actions or behavior, but it's not really about legal responsibility or liabilities. This has to do with the internal management system, based on that and other relevant factors, Mr. Kishida must have made a decision to resign from office. With respect to impairment losses, regardless of the amount, it was to some extent clear that there was going to be a certain massive amount of impairment loss.
What type of problems were there with Mr. Kishida's actions or behavior? Can you elaborate on those points?
I would like to answer the question. With respect to the impairment loss that exceeded more than JPY 600 billion, in a sense, this is one of the factors to be considered during the middle of September or so. This amount was a surprise to us at the board of directors. Thank you. That is all.
Today, we need to have an answer from Mr. Kishida's behavior and actions that were inappropriate.
This is Minai speaking. I would like to answer the question. With respect to Mr. Kishida's speech that was inappropriate, it is regarding the contents of accounting reports. His behavior was not really necessarily appropriate, as has been explained by Sakuma-san a few minutes ago.
Assessment is being made by the Executive Responsibility Investigation Committee. So aside from the legal activities, he resigned from office for other reasons. Isn't that a contradiction?
With respect to, it's the same actions, behavior. You have to think about the legal activities. That's not the basis of our decision about Mr. Kishida. We made a decision based on the ethical standards that we have in place. Based on the standards, we decided that his actions or behavior were not appropriate. Of course, going forward, the legal actions could be determined to exist or to be absent based on the investigation by the Executive Responsibility Management Committee. We are not in a position to make that statement at this moment. We have people attending online as well. Please make sure to give us two questions at a time per person. Next person.
The person over there, the lady over there, second row from the left.
This is Kiyohara of Bloomberg News. Thank you very much for your explanations today. I would like to ask you two questions. First of all, going forward, what is going to be your company's management policy? You talked about the concentration and the selection. What type of businesses are you planning to sell your businesses? Also, with respect to your sale to a third party, in addition to that, will the NPe be going to be sold as well?
I'd like to have Kaida answer that question. Thank you for your question.
Before coming to this session, prior to the presentation page, we said that we're going to take stock of the businesses and ROIC management of the businesses. That's what I said.
As you know, ROIC needs to be in function of the ROIC and WACC, and the value spread needs to be as positive as possible, otherwise, that undermines the business.
Even though with the same business and profits, if the value spread is negative, continues to be negative, that might lead to conglomerate discount of a company. That is our basic stance. However, turning the page, it is not that we can exit all businesses that are negative, but there are some of the businesses we cannot stop because of the clients, because of the relationship with the client, and there are some long-term agreement we have stricken with them. We cannot stop those businesses overnight. So we have a three year, five year planning, and then within which we try to review the portfolio of the businesses. At first, we need to run the business with ROIC, as I said
How and what to be remaining in our portfolio, that is the perspective we want to value.
Okay, thank you. Moving on to the second part of the question. The dialogue with the shareholders, including ISS and major shareholders and investors. What kind of communication and dialogue have you had at the moment? Because it is governance and accounting issues. On these matters, what are the requests or requests to improve from the investors and shareholders? What kind of messages have you received? I would like to have Minai answer that question.
Thank you. On a regular basis, we have communication with the investors. In June, governance system, organization were changed, and the new management structure and systems were launched here. With this updated situation, we would like to have a more careful communication with them going forward.
What kind of dialogue that are requested, and what kind of dialogue we need to satisfy. There are some of the requests that we might have to receive from investors and shareholders. So based on that, we would like to engage in careful and bespoke dialogue with them. Okay, thank you. All right. On the right, the second row from the front.
This is Takeuchi, NHK. Thank you. I would like to ask about the resignation of Mr. Mitsuya Kishida. You said, words and deeds, you hold back any comments. But what are the developments like? How exactly were you aware of these words and deeds? With this impairment losses recognition and so on and so forth, you said. But before you announce the financial results, do you think that there is a need to resign?
If he needed to resign because of the responsibility and need to be accountable for, probably he can be here and explain the financial results, and after that, he can step out. How do you see him? Thank you.
This is Minai answering your question. As far as the development is concerned, this is the issue, and this is a process related to accounting. So the financial results are processes. We are still aware of these words and deeds. With these specific words and deeds, in the BOD meeting and others, the discussions took place. Then this time, we tried to put everything into perspective. Obviously, we have discussions with Mr. Mitsuya Kishida, and then we decided that he will step down at this point. That is all.
Is it Mr. Mitsuya Kishida who wanted to resign before financial results announcement?
Well, September 29, there was a BOD meeting, and there was a need. There will be need to change the president. That is the communication I made. It was on the 25th, we communicated that to him. As a result of that, he submitted the resignation letter on the 29th.
We will move on to the next question. On the right, the third column from the right, the man sitting on the front.
Thank you. This is Hirooka from Nikkei. I have two questions of you. First one, I would like to ask of Kubota-san from PwC Japan. You announced a disclaimer of opinion, and there were some executives. If we were engaging the incorrect reporting, there was no finished work.
As far as Minai's san's announcements are concerned, there were some words and deeds of improper words and deeds by Mr. Kishida, as Minai said. As evidence, the incorrect reporting or improper accounting practices, that has been involving some of the executives. Does it include Mr. Kishida? If it does include Mr. Kishida, he already resigned. In order to obtain the opinion from the audit, what are the challenges? What do you think that they have to overcome? Thank you. September 30 effective, we put out the disclaimer of opinion, and the 29th that Mr. Kishida was resigned. So, that was not included in the review. What are the challenges do you think that they have to overcome so that they can obtain opinion? We already announced that in the audit reporting. Can I get answer from Nidec?
Kubota san does not give us any specifics, but in order to get a qualified opinion, what are the corrective measures do you think that you need to do? I think that there is a need to submit the sufficient evidence for the auditing. How exactly would you like to proceed?
In specific countries, there are some of the impacts on financials from specific cohort of the people. We try to identify those people. We have to review the positions and roles and those assignment. By doing that, we would like to get the audit opinion. That is what we are trying to do right now.
Thank you. We move on. On the right, at the end, in the final row. The woman raising hand
. Abe from Nikkan Kogyo Newspaper. Thank you. I also have two questions. I would like to have questions of Mr. Kaida.
First one is maintaining the listing status and also additional impairment loss risks. Now, the first one. You want to maintain your listing status? Is that what you want to do? If that is the case, why do you want to maintain your listing status? Can you give us the reasoning behind that?
Thank you for your question. As I said, the new Nidec committee was launched, and then I was the vice chair. The improvement planning, I checked that significantly, and that includes a substantial volume of my opinion. We needed to make it into execution, not only here in Japan, on a global basis. We need to execute them, and we need to penetrate that improvement.
In February, improvement plan was submitted, and since then in Japan and overseas, I directly visit those bases, overseas bases, and I try to communicate the significance of that planning or of this improvement. At the end of October, this confirmation letter will be out, and after that, assessment goes on. After that, the real activities go on. Maintaining the listing status serves as the very high level of the value from the public perspective. Maintaining the listing status is one of the missions we have to attain.
Regarding the risk of additional impairment loss, JPY 100 billion scale of the impairment loss was booked. Is this completed or to a certain extent, continuously are you verifying the asset value? Is there any risk remaining to have additional impairment loss?
In everything, would there be the additional impairment loss in future? That is the question.
I believe there are risks in everything. However, in mid, long term, we are looking at the market situation and how to offset the risk. That matters. As I stated, to have the accurate understanding of the market. Recently, we can obtain a lot of market data. ROIC work, as I mentioned. Properly, we will look at these parameters and allocate the resources properly. We are having the gate assessment. In projects, we are having the gate verification and assessment to make sure to trace the proper progress to reduce the risks. That's what we are going to do.
Thank you very much.
Okay.
Second row from the left, second from the front.
Diamond Company . I am Murai. Thank you for today. I have 2 questions. First, Mr. Kishida's resignation. I want to ask a question to Sakuma-san, Mr. Sakuma. Financial statement related improper words and deeds. Regarding that, previously, Mr. Minai mentioned about this time of the financial report. My question is that in the Third-Party Committee, there is the improper accounting. Mr. Kishida was involved. Was that newly identified? Or there is other problem, inappropriate account deed and goods were identified relating to the financial statement. Would there be the reinvestigation? At that occasion, words and deeds will be clarified? Also, without the judgment of the management committee, this resignation was made. Is that issue that scale of the significance? What did Mr. Kishida say about this? Could you please answer to this question?
Thank you for your question. I would like to answer to this. In the Third-Party Committee and the board meeting, there is the impairment loss with the substantial amount. With that, the highest management responsibilities as a President seriously took the situation. As a result, Mr. Kishida resigned. In that process, as all of you are mentioning in the financial statement, there were improper words and deeds. Those were included in the report. Regarding this, the Third-Party Committee, legal connotation. About that, we did not investigate that. As I said, the Executive Responsibility Investigation Committee in that, Mr. Kishida, is the subject of the investigation. We received a report. It is not the only judgment. There was the exhaustive investigation happening from before. Legal responsibility, accountability will be considered. About the details
We are not informed at all. We just need to wait for the report.
What is Mr. Kishida's perspective?
In the board meeting, resignation is required, so all board members agreed and adopted. As a result, Mr. Kishida showed the intention of the resigning.
Second question, Mr. Kishida's resignation. The impairment loss, the scale of the amount was unexpected, totally unexpected. Up until September 4th, Mr. Kishida had the press conference, and it was a way bigger amount. NPe, Nidec Mobility, and the big one is the past goodwill impairment loss is done. There is an expansive impairment loss. I feel there is a strong intention for that. On September 3rd, is there any policy or strong intention to strengthen the impairment loss? What is the cause of this major impairment loss generated?
Is there the business policy change towards the impairment loss being booked? Should I ask this to Mr. Kaida or Mr. Minai? Could you answer to this?
About the company policy regarding the impairment loss, basically, there was no change. That is my understanding. As you know, based on the future business plan, we will forecast the cash flow and then we compare with the existing asset. That is the principle of the impairment loss. This basically stayed the same. However, the future forecast in each business, every year it changes. Therefore, the management business plan, next year, next year forecast. What is the business plan we should build? We will test calculate, and as a result, in some areas, we cannot help but book the impairment loss.
But anyhow, the major reason of this time, impairment loss as presented, that is the very challenging business environment. That is a reason for that. So test method or anything, nothing has been changed. A supplementary comment, as Sakuma, chairman said, it was way bigger than expected. It was a surprise.
So regarding that, management members, did you expect the impairment loss of this scale, or was that a surprise to you?
With respect to the large amount of impairment losses, we are truly sorry about the amount. It's very difficult to say exactly when it started to take place, but it all depends on the timing. Six months ago, for example, unfortunately, we weren't really able to predict such a huge amount of impairment losses. But what I'd like to say is that we must not repeat this type of mistakes ever again in the future. We need to manage the future risks as the top management of this company. We would like to better analyze our future course of actions. In that way, we would like to mitigate our risks in the future. With respect to capital investment going forward, we need to have a gateway in management, so to speak. And we would like to have a very accurate market forecast for better prediction of what's going to happen.
And that's what we need to do in a better way. Thank you very much. Next person. The person on the far left over here, right in front of me.
This is Shimizu of Nikkan Auto Newspaper. With respect to the corporate rebuilding, you talked about the growth areas. I would like to ask you a question about the automotive business of your company. Here, this is a power spot, and there are three areas of concentration, as far as I can see. With respect to automotive component business, what type of a schedule that you have in mind? What type of categories are you going to be focused on, and what type of categories are you planning to discontinue, or what type of categories or businesses are you going to plan to continue or discontinue? Can you be specific, if possible, about your concentration and selection of your businesses.
Thank you very much for your question. This is Kaida speaking. I would like to answer the question. With respect to our automotive business, its sales accounts for approximately 25% of the entire Nidec Group sales. And sales are 25% of our entire business sales. We would like to have this business generate so much profit, just like the opinions from our shareholders and other stakeholders. With respect to these automotive businesses, it's a huge market we are talking about. Business opportunities are various. Business opportunities are certainly there. We have suffered some impairment losses, but does not mean we have lost our technological capabilities there. Please take a look at the bottom right section of the It says aerospace. We are having a joint venture with a Brazilian company. The answer is not going to be coming to us overnight. This is going to be our new mobility business.
We can utilize our knowledge and expertise from the automotive business into this aerospace business. The part of our business has been already reported by the media, but eVTOL is what I am talking about. This is having some We are applying our existing technologies to this automotive eVTOL business. There are quite a few differences in the requirement that are needed in this aerospace business compared with the automotive business. But we would like to apply our existing automotive technologies to this new emerging aerospace business. With respect to the automotive business, we have nearly two million units of our products shipped all over the world. Cost-wise, we are truly struggling, but does not mean that we have lost our competitiveness. We have need of any DO project as well. We would like to remain this business for our future business opportunities.
That's the type of efforts we would like to make on a steady basis. This is just an example that I have just given you. If I may add, Mr. Minai. Including those examples Mr. Kaida has just mentioned, we would like to think how we can utilize our respective technologies in other areas, and how we can utilize our existing technologies and capabilities in different businesses. That's what I would like you to know based on the explanation, based on this presentation material. Next person, please. The person from the third line from your side, the person wearing glasses.
This is Seiki of Asahi Newspaper. I would like to ask a question. The people of PwC Japan. With respect to the Third-Party Committee's report, it says Nidec executives think that PwC Japan personnel are easy to convince, according to various pieces of evidence.
Do you think the stance of Nidec Corporation lead to the Nidec's scheme or tendency of covering things up? What is PwC Japan's response to such a tendency of Nidec Corporation? That's the first question that I have for you.
Thank you very much for your question. First of all, with respect to the company or the audit firm to convince, that's the opinion of Nidec Corporation. We are not in a position to make any comment on that. With respect to past audits, we will deliberate our performance in the past, and we like to learn lessons from the past for our future audit activities.
What do you think about being called a company where the audit firm is easy to convince? That's not what we said. We are in a position to make any comment on that.
Did you ever think about this company regarding you as easy-to-convince audit firm?
Nidec at least once thought PwC Japan as an audit firm easy to convince. Well, back then, with respect to the past information, we did not recognize Nidec company thinking regarding our firm as easy to convince as an audit firm.
Kaida-san, here's my second question. With respect to the financial reporting, there were some inappropriate comments and behavior on Kishida-san's part, because of which he resigned from office as president. Some people think that he resigned from office due to accounting inappropriate practice-related reasons. Does Mr. Kishida think he has never been involved in account-related inappropriate practices?
He has long been in Nidec Advance Technology, and since 2024, he has become the ex-CEO. With respect to the Third-Party Committee's report, there is no mention of Nidec Advance Technology. If there were some issues with Nidec Advance Technology, it could be that Mr. Kishida may have been involved in the inappropriate activities at Nidec Advance Technology.
Thank you very much for your question. This is Mr. Kaida speaking. After the launch of the Third-Party Committee, the committee launched interviews and hearing sessions with many Nidec employees. I have never had such a hearing session or interview. So there was no suspected activity. Please keep your number of your questions up to 2 per person per turn. Next question, next person. The person second row from the front, the person wearing a black shirt.
This is Misme of Nippon Keizai, Nikkei newspaper. I am not sure who should be the right person to ask this question, but Mr. Kubota of PwC was saying that the people, responsible positions, is there going to be just one person or are there more than one person? Then does Nidec know about those responsible people or person, individuals or individual?
Well, as introduced, across various countries or some countries or multiple countries still have some people who might have been involved in this case. There are various cases.
You mean those people work in multiple countries? Sorry, can you say that again? You said those people work in various countries, so does that mean multiple countries? More than 2 people?
Yes. Okay. I would like to drill down. From Nidec perspective, having known that, you allocate those people into those roles and positions. If they are executives, then some of the responsibility have to lie with the board of directors meeting. What do you think?
Yes, thank you. As PwC presented, healthy accounting practices need to be done, which requires some preventive measures. We have taken this process. But from the operational perspective, some cases have not worked. That is what the PwC pointed out as a comment. As we go through the accounting practices, there are some of the people that are deemed as suspicious, and we need to do something about it, which took some time. Okay, we move on. Far right, and the person sitting on the front row.
This is Kume from Yomiuri Newspaper. Thank you. You limit our questions to 2, so I would like to single question to one person. I would like to ask question respectively for Nidec and PwC.
First, Kubota-san, you submit this audit opinion, and you said you want to fulfill the responsibilities of the audit firm in charge of Nidec. That sounds like you intend to put out the opinion of audit. Why do you sound like that? Because as far as I read the audit report, it sounds like you need to swipe out all the executives sitting on the board at the moment, otherwise we cannot publish opinions. What kind of the ranks of the people, how many people you need to cut out so that you are satisfied? What are the requirement that you think you want to impose on Nidec? As a responsibility, in order to fulfill the responsibilities at audit firm, you want to fulfill responsibility, but what are the requirements?
Now, from Nidec perspective, I think there are some of the things that you are ready to take steps, like how many people you want to replace, and including managers and executives, you are ready to switch everyone who deemed as suspicious. Again, I want to ask about the requirements from PwC perspective. I'd like to see comments and also takeaway from Nidec perspective. Should I go first?
Thank you. From PwC perspective, as an audit firm, as I said, we will continue this auditing contract. As a firm, if we continue to strike in the contracts with Nidec, internal control needs to be put in place, and this company has a will to put up the proper financial reporting, and then we need to get the auditing evidence. That part, yes, we are responsible for that.
What will it take?
As I already said many times, we need to have a dialogue with the company and proceed. We continue to be engaged in dialogue, and we would like to make it clear what exactly to be done. That's what I meant.
From Nidec perspective, you received these opinions, but what are your readiness to get it rolling?
Once again, I think I already explained that, but as you pointed out, there are some of the challenges you need to sort them out, which is very clear. We need to overcome those difficulties and challenges and receive the audit opinion from the audit firm, and we want to have the people and parties concerned feel relieved.
Let me move on to my second question. What led to current management organizations?
Kaida-san is just a corporate officer and not involved in BOD, but Minai san has a representative director, and Kaida-san is not director even today. Minai san will support Kaida-san. You're having press conference today. I think this is the first time for Kaida-san to take a stand here, and this is a great opportunity for you to show the direction for the general public. Maybe this has nothing to do with your future, but from Nidec perspective, there is a founder, Nagamori-san, and also the former president, Kishida-san. As someone who leads this company, what are the comments would you like to give, including impression that you got from Nagamori-san? What are the development that led to this, your assignment? Is there any additional expectations that PwC has?
Is there anything that you witnessed that there are some changes because of this shakeup of the leadership? That's my second question.
Well, I think as you saw my CV, I just became 70 years old. 50 years or some, I've been just working. I'm approaching to the very end of this career. Do I want to contribute to something big or do I decline? Yes, there could be some options you could take, but this is a company who took care of me a lot and that society as a whole supports me a lot. I want to revert and return it back somehow. On an emergency. We have thousands of thousands of people employed here in this company. I don't know how far we can go and how far I can deliver.
I do not know how far I can actually be contributing to this company's performance. But a nomination committee of the board of directors meeting asked me to serve and be ready to take this office. I thought that it has been 50 years since I started to work, and this is the very final stage. I just simply wished I wanted to contribute. That is why I nodded and said yes.
What led to this shakeup of this organization? What impression you get from Nagamori-san and Mr. Mitsuya Kishida? You said you were told, you were asked at BOD meeting to take office as president. When was it?
Well, that is related to internal events, so I do not think I should make comments for that. But as chair said, always I need to take on this job as an emergency response.
This company needed someone who is capable of responding to emergency, and I surely was one of the people who are capable of responding to these emergencies.
Can you make comments on impression that you got from Nagamori-san?
Well, in comparison to the old organization or top management team. When we encountered Nagamori-san, that was back in 1997. Ever since then, I was in subsidiary of Nidec. I have been involved in the going public in Tokyo Stock Exchange. What kind of relationship did I have with him? Well, in a very small company, he gave us a dream, and three years out, we went to public. Nidec Advance Technology Corporation was a private company, but there was only one company who went to public. So he gave us dreams, including employees. I think he gave us dream.
In that, I appreciate his contribution. Next question, the third person from the right from your side. The person on the third row. Go ahead.
I am Inoue, freelance journalist. Mr. Kishida, regarding his inappropriate words and deeds, in the Third-Party Committee's report, Mr. Kishida gave the direction of the inappropriate accounting. That did not happen, but rather, for the healthy accounting of Nidec, Mr. Kishida made efforts. That is the evaluation. That is in the report. So this management person, why do you understand Mr. Kishida as the person who did the improper words and deeds? Did you ask him this question? Why do you evaluate in this way? How do you interpret this situation? Next question. PwC. Question to PwC. This is not about the disclaimer. However, the representative of PwC is here. In the past, I have been interviewing Nidec for many years. When I talk to them, PwC Japan LLC, Aarata, and Kyoto got together. It is a new company.
Representative of Kyoto, Mr. Matsuzawa internally was very much listening to Mr. Nagamori's opinion. When we do the interview, we hear that from many people. What does that mean? This person created the financial report to be favorable to Mr. Nagamori. You just let him did what he want. Do you have this understanding? That is my question.
First point from Nidec. Nidec will answer. As the chairperson, Mr. Sakuma, explained before, the Third-Party Committee evaluation. This time around, we have a different perspective regarding the improper words and deeds. As board members, we looked into this. Overall, there is a topic of impairment loss and accounting related words and deeds. Overall, comprehensively, we looked into this, and judgment by the board members were made. Words and deeds in the financial report, the criteria or standards we looked at is that under the new governance system, with the higher level of ethics, we want to have a leadership. That is what we expect. As board members, this is something we need to verify in a solid manner. That was a major factor of this decision. This is the answer to the first question.
Regarding the second question, PwC will answer. Mr. Matsunaga, former Kyoto, former Aarata. Before the integration, he resigned. We would like to refrain from making comment for this individual. Okay, next question. The third person from the left, from the audience side, and then the third from the front row.
Toyo Keizai, Tokura. Thank you for today. Question to Mr. Sakuma. In the beginning on August 5th, in the temporary board meeting, you had the emergent or urgent response, and Mr. Kishida was leading the renovation of the company, change of the company. From August 5th, some emergency initiative needed to be taken. Is there any behavior by Mr. Kishida that you sensed some risks? Why did you take these emergency actions?
Thank you for your question. Sorry, where are you? Thank you. Thank you so much.
As I mentioned, Mr. Kishida is the subject of the survey investigation, and also, he was the CEO, the president.
Therefore, naturally, as a result of the investigation, he could be held accountable legally. As the corporate governance code goes, we need to consider the plan for the successor. At the same time, with the situation, we need to prepare for the emergency. That is the judgment made for this time. As of August, we did not assume that this could happen. Thank you.
Second question. A question to PwC. In the audit report, there were four executive officers, and among that, three have been changed from the November members. These three have been changed. Is that with the intention to change the system, change the structure? These three were from the former Kyoto members. Is that part of the reasons that these people were replaced?
Thank you for your question. With the complexity and uncertainty of the situation, we looked into the experience and capabilities. We chose these four members for the best structure can be formulated. That is why.
Thank you.
Okay. Lady on the right.
Seiki, Asahi Shimbun, Asahi Newspaper. Past years' accounting statement was revised. Total loss. I would like to confirm the total amount of the lost. Past two years' impairment loss, JPY 288 billion. FY 2026, JPY 632 billion. The total is about JPY 900 billion. Plus, net revenue was revised. In total, in the past two years of the loss, the amount is JPY 1 trillion, 100 billion plus. Is that correct?
Nakagawa, I would like to explain. Let me show you the slide on the screen. PL. This is based on the PL and impairment loss. Past five years' cumulative sales profit, operating profit total was JPY 382.6 billion.
This is the breakdown of the past revision. The Third-Party Committee pointed out JPY 174.2 billion. After revision, we did a test. As a result, JPY 288 billion, plus extra, and the result is JPY 382.6 billion. This is the loss of the operating profit.
Next on to this slide over here. For this FY 2025, we have a loss of JPY 519 billion. You can see the amount from the past. For the lately closed fiscal year, you can see it there, the net impairment loss, JPY 632.1 billion, which is an increase by 425.4% on a year-on-year basis. I believe this answers your question.
A total of financial impairment is something that I want to ask you. On the OP basis, I believe you have a certain amount of operating profit. Do you think there is going to be any impact on the net assets?
With respect to the impact on our net assets over the past five fiscal years, please take a look at this slide. JPY 476.9 billion negative, that is the corrected amount. That is the amount of loss we have incurred. For the fiscal year 2025 that ended in March 2026, slide number 27, you can see the impact on the net assets compared with the past fiscal year of JPY 502.2 billion. You can add these two numbers to come up with a total. You can see the amount from the past fiscal year and the latest amount of impairment losses that has been incurred. Next person, please. From the person from the third row.
This is Furuchi of Kyoto Newspaper. Thank you very much. I would like to ask you a question, Mr. Kaida.
With respect to PwC's audit opinion, you will have the opinion to be released by or at the end of October. Do you think the opinion is going to be disclaimer of opinion or a qualified opinion? Do you think such an opinion from PwC Japan will directly affect your company's possible delisting from the stock exchange market?
This is something that I have been repeating many times with respect to PwC. Between them and we have been sharing issues with each other, and we are closely monitoring how we are doing things currently towards the deadline. We are going to make adjustments between each other.
What is your possible action if you received another disclaimer of opinion? That is not what we are thinking of currently at all. Here is my second question. You have this new report released today, the sale of Nidec Components, and among other issues, you are trying to make a shift toward growth areas based on this presentation material here. You are going to go through a selection and concentration process over ACIM and other businesses. Are you going to be very active in this process of selection and concentration? Can I ask your company's business strategy here?
This is Mr. Kaida speaking once again. As I have said already, at this moment, we have this ROIC as one of the elements for us to utilize in order for us to be in a positive territory in our corporate value. We like to utilize the ROIC as part of our strategy. We need to concentrate our resources on growing businesses. We have suffered from impairment losses.
With respect to businesses related to cost, related to these impairment losses, we need to handle, we need to treat those profit losing business accordingly. With respect to profitability-generating businesses, we have many of them, a lot of them. In the future, these businesses could become a part of our core competence or not.
That is what we need to determine with respect to these prospective businesses, potential businesses. Just like the NIDEC COMPONENTS CORPORATION, we may decide to look for a best owner other than us with respect to some businesses that we have at this moment. If you take a look at these five business pillars right behind you on the slide.
Are you going to be focused on ACIM as well as AMEC, appliances, automotive businesses? That is going to be your focus?
That is correct.
Thank you.
Next person. The person in the back, the lady over there.
This is Anzai of Mainichi Newspaper. I would like to ask a question, Mr. Kaida. With respect to inappropriate practices, you said you have not been subject to the investigation by the Third-Party Committee, but one of the causes of the inappropriate practices is that there was a corporate culture to have not just but to follow Mr. Nagamori's instructions. What is your response to such a comment? How have you been able to handle that pressure from Mr. Nagamori?
In the improvement plan, there are quite a few matters related to what you have just pointed out. As a person involved in businesses, I believe at any company, in any company, there is some extent of pressure from above over on any business. This is more like a qualitative issue. So it depends on the interpretation of such instructions coming from the top.
Within the entire Nidec Group, in that regard, even if there had been a same amount of pressure on everyone, quite a few business entities had done their jobs properly. Of course, we need to avoid a pressure applying situation in the future.
Thank you. Here is my second question. At the beginning of your presentation, you talked about submitting the written confirmation of internal management system. What do you need to do as a company prior to submitting the written confirmation of internal management system?
This is something that is described in detail in the improvement report. From this April, based on the improvement plan, we have this horizontal axis as well as vertical axis. We are trying to connect these axes. We have this CXO line in place. We have a CEO, CHO, CTO, et cetera.
We have these firm ties among these CXOs so that we can have this very streamlined communication line based off of this vertical communication process. This is what we like to spread to our approximately 35 business bases all over the world. For example, up until recently, I remain working as a CTO, Chief Technology Officer. We have a CTO at every legal entity, and we have had a global board member of CTOs in place as an organization. We have started activities to enhance these horizontal ties among our CTOs in our Nidec Group. That is the type of activities that are currently already taking place. That is the type of governance we would like to enhance and strengthen, and that is the type of common understanding we have among ourselves.
I would like to take the next question. On that row, the man sitting in the front.
Yes, thank you. This is Kawase from Nikkei. Could you please show me the page 20, the potential change on the distributable amount? The very end. Distributable amount. That was excess for five fiscal years. But this could violate company or corporate law. Are there any measures needed? Obviously, you cannot return that money back from shareholders, but is there any work that you have to be involved because you are exceeding this distributable amount?
Okay, this is Minai speaking. Let me answer your question. Yes, from that perspective, how better we should assess this matter, including the legal issue assessment, that is the work on the way.
Okay. Can I ask the question of Kubota-san from PwC?
You are going to have a higher level of the audit work, you said, and today you put up the disclaimer of opinion. But you were not unable to identify the improper accounting practices, but still strike the contracts with Nidec as an audit firm. How do you see accountability as an audit firm?
Thank you for your question. As I said, currently we need to proceed the most recent auditing. But internal study, internal discussion goes on at the moment for the past audit, and should any survive, we would like to take actions. Okay. Thank you. Okay. I would like to take the next questions. Second row from the right. The man sitting on the second row.
This is Nishizaki from TV Tokyo. I would like to ask a question about the corporate culture of Kaida-san.
There are some of the business you need to get things right, even though there is pressure. But through a series of improper accounting practices, what are the root causes that is driving the current state? In case there were issues around the corporate cultures, what are the Nidec corporate cultures like, and where do those issues lie, you think?
Well, that is a good question. Whether it is pressure, corporate culture. I am an engineer, so I prefer to quantify things. There is qualitative things and a quantified topic, right? It is corporate culture and pressure. We cannot necessarily quantify, right? So it is not necessarily easy to tell you what that is, and especially corporate culture-wise. It is a culture, right? In one company. For example, as I browse the group companies, especially overseas. Over the past two years, I visit those overseas footprint.
There are many companies, like a 100 years history that has been proud of in those companies. After 100 years, you have a brand, or established brand. Then we try to respect for these distinctive brands of these companies. Is it a bad thing? No, not necessarily. Protecting, branding, and ensuring governance, that is a totally different discussion. So while ensuring brand, you need to build a governance. That is a new mission, so that we are able to build a new additional corporate culture in Nidec. So in that sense, I said CXO line. Very frequently, on day-to-day basis, we try to exchange opinions with the people globally. Also we try to invite the foreign workers from group companies here in headquarters, and then engage in discussions on day-to-day basis. There is a program called Culture Transformation.
We try to travel and visit those global footprint. It's not easy task to change and transform the corporate culture overnight, but we need to overcome one by one. We need to physically visit those places. You need to be independent in visiting those places. So that you're able to build a corporate culture, that's necessary, I think. For that sake, I continue to make I will devote my efforts forward.
Okay, thank you. The former, Kishida, took center stage in this transformation and those reform, and some marketers highly appreciate. I think that you were involved in this new Nidec Corporate Reform Committee. How do you assist them? Do you think that you would like to carry on this direction of the reform, or would you like to tinker a bit of the where we would like to go as a company?
Well, new Nidec Corporate Reform Committee was launched. I was a vice chair, and Mr. Kishida was the chair in that committee. So in that sense, we are in the same boat. So obviously we were aligned. As I touched, as we create the plan, we need to pivot into execution. We need to implement that. Obviously, you need to execute what you plan, and sometimes you need to change yourself. You need to change what's been here for long. But we are not in a stage of implementation yet, so as we are going to get implementation right, we need to correct what has to be corrected. That should be the best way forward. Okay. Any other questions? Okay. I've had the people on the waiting list for online.
So I would like to get the questions from the five people from the floor, and then we would like to move on to the people online. Okay. Second row from the left, and the person raising hand.
This is Takayama from Kyoto Newspaper. Thank you. Sakuma-san, Chair, can you ask your question? Can you be honest in why you chose Kaida-san? Kaida-san is someone who worked in Nidec for many years, and this time you need to turn this company around. How do you see his credentials?
Well, thank you for your question. In terms of the process of choosing him, starting August, we started preparation, and then the chair of nomination committee, Yamamoto-san, and under which very careful and deliberate deliberation were taking place, utilizing third-party institutions.
We have spent enough time, and we try to go through assessment of candidates, trying to get reference, for example. Very, very careful approach were taken. As a result of that, we got to the final conclusion to choose Mr. Kaida. Obviously, we try to look at him from various perspective, various angle. From my perspective, we are in a very extremely difficult situation, and we need to change our company into more sustainable manufacturer. He is the one who is capable of turning this company around to be that state. That's why I asked him to take office as president. It sounds easy, but the chair, Yamamoto-san, and members of nomination committee, and the board of directors, and everyone make decision, and they count on him. That's all.
Okay. Can I ask you one more question? The members of the board of directors were changed, including outside directors.
You set up a new, the board of directors members at the moment. At this juncture, how would you like to face with this company, or how would you like to change this company forward? How do you see the vibe around discussions internally?
Well, if I resort to the words I said, the healthy, sustainable growth. That is the growth we want to attain with the internal control strategy in place. Substantially, improvement has been. Actually, we are able to witness those substantial change and improvement.
But unfortunately, fiscal year 2026. Fiscal year 2025, we already announced that performance. Unfortunately, that fiscal year 2026, the year ending in March 2027, we can expect a little bit more. Regarding the internal control, this is an interest effort. There is no sufficient effort to be taken. We want to continue to improve with the management members and employees. We want to work on the enhancement of the corporate value. I am afraid that as a chief of the board members, I ask for your support. I ask for your understanding. Thank you very much.
Okay, previous first. Next question, the third from the left, two rows from the front. Go ahead.
I am Kamugai from NHK. Board members investigation committee, is there a schedule? Maybe this is an independent one, so you might not know, but is there a schedule that you? Minai.
Thank you for your question. We launched this committee in April, and a Third-Party Committee report after that. This organization has been launched, so it is about six months. Regarding the timeline, we would like to get the conclusion as early as possible. We are longing for it. As for the current status, well, we have independent experts, so it is up to them. We do not know. That is all. Thank you.
Regarding today's press conference, Nidec and PwC together, we are having the press conference, and which it does not happen often. What is the intention? Minai.
Thank you for your question. At this timing, it is such an unfortunate thing that the disclaimer was the result. We would like to convey as much as possible in a correct, accurate way, and we consulted with the PwC, and that is how we are having this press conference together. Thank you. Anybody?
Any questions? Thank you. Second from the right, at the very back. Thank you for raising your hands.
Sankei Newspaper, I am Kuwajima. This might be the question to Mr. Kaida or Mr. Minai. The reason for the disclaimer. There is this person remaining in the management who reported to the audit team, and the preventive measures were set up, but sometimes there was no compliance. There is the internal risk of the management team. Is this because of the renovation or change of the organization was not truly achieved? That is the reason why this happened. What is your understanding? Could you let me know?
Minai will answer this question. Preventive measures. Person who is related to the improper accounting, should not be involved in this accounting practice. That is how we started this. However, in some countries, there was some involvement.
From the audit perspective, the reliability of the process, it is quite difficult to make a judgment. Those are the reasons. Those were identified in several countries. We are trying to set up a healthy structure and practice, but these facts were identified, so we would like to improve the situation for the audit.
Besides that, specifically for the future, for example, financial report, a responsible person who did not tell the truth. All these people will be removed or are you going to strengthen the preventive measures? What preventive measures exactly are you going to take?
Thank you. We started to take actions. Those who are skeptical of taking such actions, we are replacing these members.
Which means preventive measures did not function well. Physically, you are removing these people. Is that the measures you are taking? Is this understanding correct?
Yes, that is correct. This initiative is already starting.
Thank you.
Okay, next question. A man in front of that person.
Yomiuri TV. I am Kuzuhara. If my question overlaps from the previous one, sir, I apologize. Question to Nidec. Kubota-san from PwC mentioned that the disclaimer reason is that there is no HR control, internal control, and that Mr. Kishida is not the subject for that. However, Mr. Kishida inappropriate involvement. Mr. Kishida doesn't apply to these members who had the inappropriate report to the audit. But still, there are some management who's remaining. Or from the beginning, Mr. Kishida was not engaged in those improper report to the audit. Which is it?
Mr. Kishida is irrelevant with this reason for the disclaimer. That's our understanding.
Okay, last person.
Nikkei Newspaper. I'm Matsuda. Regarding the preventive measures, my question might overlap, but just a little bit. I appreciate your understanding. Question to Mr. Kubota. Preventive measures, inappropriate accounting, so suspicious people who's engaged in that. This structure is complete. If that's the case, there was no issue. However, in reality, it was not complete. Is that the case? Or is it a different scenario? Is there a drastic change of the reform of the structure that was required to have the disclaimer of the opinion? Is that it?
Well, thank you for your question. As I explained, there are some part that we wanted to take the preventive measures, but it didn't work out. Also, those who were not subjects about this inappropriate actions turned out to be the subject as well. Thank you so much.
Now question to Nidec.
If that's the case, people engaged in the improper behaviors, so will be removed from that position. Going forward, how many people needs to be replaced to different positions? If you can share that with us, please let me know. These members have the relative expert knowledge, so it's difficult to replace, I believe. But you are removing them, and in coming one month, you are going to streamline your structure and revisit the numbers, and you try to obtain the opinion. The timeline is very tight. What do you think about that?
This is Minai speaking. Thank you very much for your question. With respect to the number of such people, as I've said before, we have certain countries that I'm thinking of. We are checking the number of people. It would be 20 or so in total. With respect to our methodology, we have already had this discussion nearly complete. We will reestablish our system to conduct audits. That's how we like to do things going forward. Thank you very much for waiting, people participating online. We'd like to entertain questions from you. If you have any question, please make sure to utilize this raise hand button on your computer screen. We will call on you one by one, and please make sure turn your microphone on and state your name and affiliation first.
We'd like to answer as many questions from you as possible, so please make sure to limit the number of your questions to per person. Thank you very much. The first person, Mr. Hirata of UBS Securities, please.
Thank you very much. This is Hirata of UBS Securities. Thank you very much for calling on me. With respect to the investment during that year of fiscal year 2025 that ended in March 2026, it will be an increase by JPY 10 billion. In total, can you break the amount down? Do you expect this type of growth to continue in the second half of this fiscal year? What are the meaningful factors in first and second halves of this fiscal year?
This is Nakagawa speaking. I would like to have Nakagawa-san answer the question, actually. This is Nakagawa speaking.
With respect to JPY 150 billion and JPY 160 billion, as you can see, there are some differences among these companies. MOEN is the leading business unit of the entire Nidec Group, and profitability, as you can see here, is approximately profitability between FY 2025 and FY 2026, JPY 150 billion or so. NMOJ, which is part of the AMEC business, between FY 2025 and FY 2026 fiscal year comparison, is approximately - JPY 6 billion. That's the major figures that we can tell you. With respect to meaningful difference, that's our internal terminology here. Between last and this fiscal years, we have had the Third-Party Committee. We have relevant costs, expenses, and cost for making corrections, and the auditing fees. If you add all of these elements in between FY 2025 and FY 2026 fiscal years, we are expecting a large amount of cost to be incurred or recorded.
On the OP basis, meaningful difference for the fiscal year 2020, JPY 75 billion, JPY 40 billion in the first half, and JPY 335 billion in the second half. These costs include costs for strengthening our weaknesses in our internal management system. This is something that we have announced already, but we have an IT system that needs improvement, as well as we have the second line of improvement with respect to the improvement of six functions. Please keep that in mind. That, I believe, answered your question. Hirata-san, can you hear us?
Excuse me. With respect to this meaningful gap in the differences, I believe you're talking about fiscal year 2020. Do you see the continuation into fiscal year 2027?
There will be a certain level of cost to be incurred in the FY 2027 fiscal year. We need to strengthen each head office's six functions.
For that, we need more people, and we need to improve our existing systems. For these costs, back in 2020, compared with the system and people in fiscal year prior to 2024 or 2026, for fiscal year 2027 and thereafter, there will be a certain level of cost to be incurred, in my understanding. Okay, thank you very much.
With respect to the second half of the fiscal year, you are expecting a reduction and a decline in the profitability. Why is that?
Where costs are all incurred in the emergence of meaningful costs. We have developed inverter system on our own. That caused a huge amount of impairment losses, and we have had a huge amount of reserves for the business. Based on the conventional contracts, the calculation is expecting us to produce the two million units or so.
Because of that huge amount, we have had a huge amount of impairment loss incurred. We cannot continue to incur such amount of impairment losses. We have had the reserved amount of money, and we have repeated negotiations. With respect to this number of two million units, for which we have had a reservation, 250,000 to 300,000 is the new number we have been able to reach after negotiations. With the decline in the number of the units we have to produce going forward, and we are planning to incur the amount of cost which has been signed in the first half of this fiscal year. The emergency-related costs may differ from timing to timing. But you can see the difference between first and the second halves of this fiscal year.
With respect to change in number of inverters to be produced, we have some reversal of reserve. You can see the effect related to depreciation. Due to the huge amount of impairment loss, the assets, the amortization depreciation cost will be down. So you will be 50/50 between the first and the second halves of the fiscal year. As analysts have already been aware of, we have a depreciation cost of JPY 130 billion or so for the first half of the fiscal year, and that amount will be reduced by half in our forecast. Based on the number of years for the depreciation of fixed assets of our company, this situation will continue after the fiscal year of 2026. As you can see on the slide, we have non-recurrent, non-incurred expenses, and that is included in this slide.
We are expecting to reduce in the amount of depreciation and amortization. That is all from me.
Thank you very much for your answers. Here is my second question. With respect to your business portfolio, Mr. Kishida has mentioned E-Axle business and its future policy. He talked about something like withdrawing from the business. Can you possibly ask for your opinion on the future policy for this business? With respect to the E-Axle, you are talking about the business portfolio. Five pillar. Yeah, this one. Thank you.
Yes. We try to be selective in allocating resources, and we continue to study how this business should look like. There are some of the businesses operating overseas, and how that should be and where should be the focus. That is what we are currently studying while formulating the next mid-term management plan.
We try to flesh out details of what kind of actions we should take at the moment. Okay, let's move on. Thank you so much for substantial amount of time that you are with us. There are currently eight people raising hand, and that's the end. We would like to take up the eight questions from the floor. Major Market, Yoshida-san. Yoshida-san, do you hear us? Hello? Hello?
Yes, I hear you. This is Yoshida, one of the reporters in Major Market. Thank you. Maybe my question might overlap that, how would you consider the divestiture? You said you talk about ROIC. You talk about ROIC, but if you look at timeline, how should I understand? Share price has tanked, and it's critical that you try to regain trust and credibility from the shareholders and investors.
I think that you have considered the various options to take, but substantial volume of divestitures are under review at the moment. I guess you're currently focusing, concentrating discussions on the maintaining the listing status. Until you're able to resolve those difficulties, you're going to put them on the back burner. What's the timeline like? I know it's pretty difficult to give us specifics, but give us a comment.
Well, thank you for the question. This is Kaida speaking. I'd like to be brief in answering your question. As I explained a few minutes ago, whether it's a home appliance or automotive, there are some of the businesses we can stop right now, or there are some businesses we can't stop overnight because of the relations with the client.
In a short space of time, some unit might be carved out, or we might have to integrate or split the businesses. We need to spend 2- 3 years to do the actions. That's the kind of the horizon or timeline you might want to be ready. Okay, so 2- 3 years. In order to respond to the long-term challenges, you're going to work on it, not necessarily solving the current challenge. Well, as we are going to announce mid-term management plan, and we are going to announce it by the end of December this year. I believe that we are able to come up with new ideas in discussions. Who knows? But we can't give you any specifics of which unit is to be what or this.
Okay. Thank you.
Okay, let me move on. Takaoka-san from Nikkei Cross Tech. Thank you.
Do you hear me?
Yes, we do. Kaida-san, I would like to ask you a question. Since you took office as president, give us a comment on the work of the company. Would you like to transform this Nidec? Because the founder, Nagamori-san, said, "This wants to be number one right now, or until you're able to achieve, we definitely will absolutely do this." It's very clear, cut instruction. That might have been some problematic, but this has enabled you to achieve the significant growth. But you said RRC management or being selective in allocating management resources. Yes. As a major company, I wouldn't say it's normal, but you oftentimes hear those comments. It's not necessarily exceptional. But as you take an office, what kind of the sales size? What kind of profitability you want to attain? Give us a comment. That's my first question.
Well, thank you for your question. First things first, we need to lift ourselves of the securities under surveillance. We are a manufacturer, and we need to be a competitive company with technologies that we have. Technology is time-tested and skill-tested. It is really all about how many core competence you have to enable you to grow your business. That is a critical part. You need to sell technology. Once again, we need to renew ourselves to the commitment, and we need to focus ourselves to the mission. For the technology, specific technology, the world will fail, and the world is desperate for the very specific technology we offer. That is the kind of the company we have to offer.
It is not to say that we have to attain some trillion Yen, but we have to offer the value proposition so that we are proud of who we are and why we are here. That is the kind of company we want to change. That does not answer your question.
Obviously, without technology, you cannot be a manufacturer. You already have a cutting-edge technology. You are able to achieve revenue and profits. It is not what I wanted to hear. As you took office, how better can you achieve growth of Nidec? That is what I want to hear.
Yes, I have been engineer for many years myself. I am still concurrent CTO, and organically, we need to combine technologies we have scattered across Nidec, and we created, I created CTO Summit. Globally scattered technologies need to be applied horizontally across the globe. That is the kind of program and activity I just launched.
Technologies that we have as Nidec scattered across the globe are not necessarily shared. One thing I want to make sure is to turn this technology into the usable technologies so that we can make inroads into a new market. There is a new giga market, but we would like to go into a market where the growth is set high. From the employee's perspective, while you are in a very difficult situation, especially the engineers of the younger generations might change their jobs. We are using increasing number of engineers, including mid-career and fresh graduate.
In terms of the recruitment, you see or you feel, or you might be worried that potential risk of the recruitment?
This is Minai who is in charge of HR. Well, thankfully, back to your first part of question.
Even though we are in an extremely difficult situation, not necessarily only on engineers, but some employees, obviously, yes, have left us, but quite a lot of people still stay and try to work on to turn this company around. It is not that our turnover ratio goes up. We haven't confirmed those change of those numbers on paper. That is why I would like to really appreciate for our employees. You asked the question of the recruitment. Yes, we do struggle with recruiting new fresh graduates, but we see some new graduates, and we have an unofficial approval ceremony, and there were quite some number of people who are coming to our company. As soon as possible, we need to turn this company around, and I would like to make sure that those people can have a dream.
By transforming ourselves into the state, I just hope that many more people just wish for coming to this company and working for us.
Next, Citigroup Securities, Mr. Naito, go ahead.
Thank you. This is Naito, Citigroup Securities. Let me ask some questions. I have two questions. First, just double-checking with the previous person's comment. In the beginning half, there is this allowance or provision, and then is that the emergent expenses included? That was the JPY 160 billion. Is this understanding correct? In the future growing area, spindle motor, I think it is in good trend. Could you give us any clue of the future forecast of your product?
Nakagawa speaking. Confirmation of the previous point, JPY 160 billion and the breakdown of it. Unbooked part. There is plus and minus, but basically, in the beginning half and latter half together. Just a moment, please.
I appreciate your patience. Business operating revenue will be about JPY 80 billion each. Breakdown of JPY 160 billion, once again. Business revenue, JPY 80 billion each. Excused one, the breakdown of JPY 40 billion. Beginning half, latter half, the return of the allowance is JPY 36 billion each. Emergency expenses, beginning half, JPY 40 billion, latter half, JPY 35 billion. Inverter unit number change, and the allowance return profit is JPY 45 billion. That is the breakdown. As for the future forecast, in our current portfolio, the growth area and revenue area, we have pillars as presented. Those are data center-related business and motor business, ACTD-related business. They are the major source of our revenue. Not limiting to that, we have to expand. We want to grow further with the other business areas as well. That is all. Thank you.
Thank you. I have one more question.
There was a major impairment loss, and your asset ratio went down significantly. Regarding in terms of the growth, are you thinking of any measures with the cash flow, and are you going to improve the overall accounting? Regarding the cash flow, what is the challenges or what should we be mindful of? Would you please comment on that?
Asset ratio of our company went down to about 25%. In mid long term, we would like to aim for 40% or so. To bring it back to 50%, that is the original ratio, but we need to accumulate a lot of amount, and we aim to be 40% sum. That is the current thinking. Accumulative, the impairment, we would like to build upon the business operating revenue, and we will proceed with the restructuring, and there are some expenses along with it.
We will sell out some of the businesses. Divestiture. With that, we can gain certain cash. The basis is the operating revenue. There is a net profit and cash that we want to build up. Regarding this, internally, we are looking into the midterm business plan. We will be having these numbers in mind, and the pillars are, as Mr. Kaida mentioned, ROIC is the very basis. We will make ROIC for something to be taken for granted, and feasibility as well. With that, we will incorporate that into the plan.
Thank you.
That is all. Next person,
Diamond Company, Asashima. Ms. Asashima. Thank you very much. Do you hear me?
Yes. I am Asashima from Diamond. Two questions. First, sorry, it overlaps, but once again, regarding the resignation of Mr. Kishida, just let me double-check. A question to Sakuma. JPY 600 billion plus impairment loss.
Besides Mr. Kishida's wrong, improper words and deeds regarding the accounting report. These two are the causes, and at the board meeting you identified some facts, and those two are the reasons for the resignation of Mr. Kishida. Is my understanding correct? It is, in the minutes of board meeting. That's the first question. Second question. It's simple. Regarding the impairment. A question to Minai-san or Nakagawa-san. JPY 600 billion plus impairment was generated. This test, this is calculated in the future cash flow. Going forward, depending on the forecast, that could change. But impairment test, did you conduct that internally or PwC or other external audit firm got engaged in this calculation? If you have the outside firm, what kind of roles do they play to look at this in a very strict side or what is the role of them?
This impairment test and the result of that, who approved that and to issue this conclusion? I have these two questions.
Thank you for your question. Mr. Kishida's resignation. What was discussed in the board meeting and how did the decision made? Let me reiterate. FY 2026 March, there is the JPY 200 billion-plus impairment loss was confirmed. Now ethics standard is higher, and as stipulated in a press release, improper words and deeds by Mr. Kishida about accounting words additionally reported. We comprehensively made the decision that resignation of the president is required. Both are the reason, is that correct? Both are related. Board meeting confirmed both issues, both elements. That's correct. Both elements were considered and discussed in the board meeting. Now, Mr. Nakagawa will reply to the question about the impairment loss.
Regarding the accounting treatment of the impairment loss, based on the accounting principle, we treat this. A fixed asset impairment test and also there is the impairment of goodwill. This time around, we have this major impairment loss. In terms of checking the goodwill impairment. Business unit, we did the impairment test ACIM, NPe, NMOJ. In that unit, we did the check. This is the annual one. Midterm plan or confirming the business loss situation, the most recent ones. With that, we conduct the test. Regarding the result, we had PwC to check that. We explain and gain the understanding. Eventually, that will lead to the accountment process. Regarding the plan, we had a very severe, difficult plan. We have the major impairment loss. In the internal management meeting that is approved, and we have this accounting treatment eventually.
ACIM, NPe, I understand that because it is stipulated in the details. However, in the impairment test, are you using the outside firm? With respect to the use of an external advisor
Right. Is it any different from the usual investigation? We did not use any external advisor. Our company's accounting department is home to a group of people with expertise in the accounting area. We utilized their expertise, because all the calculations were performed by our internal resources. It is the same usual impairment calculation, loss calculation. For the future policies, the situation differs from time to time, but the mechanism itself remains unchanged from the previous time or this time. Okay, thank you very much.
Next person up. Nagasawa-sama. Mr. Nagasawa of Monolith, please.
This is Monolith editing, Nagasawa speaking. Thank you very much. Can you hear me? Yes, we can hear you. I would like to ask a question, Kaita-san. You talked about you coming from an engineering background. You have been involved in the development of various technologies and products.
From your perspective, what are your thoughts and your passion about making things or producing things? This company has been subjected to some quality-related issues, inappropriate practices. But what is your passion about engineering or producing things?
Thank you very much for your question. I come from an engineering background. I used to be an engineer. For a period of 10 years or so after graduating from school, I was focused on product development. For the following 30 years, I was involved in company management to be able to appeal our products and services to the entire world. For that purpose, we wanted to make sure to understand how valuable our technologies are and how competitive our products and technologies were in comparison to those of other companies. I was involved in various technological competitions to train ourselves, improve ourselves. In that regard, we want to foster, nurture the technologies.
Technology cannot be achieved overnight, of course. Because making things is about making people, as an old saying goes. We need to go back to basics in that regard. We are going to utilize AI and many other different technologies going forward, but basically, it is all about the people. We need to polish people's skills and technologies. That is one of our critical, important basis infrastructure as a company.
Okay, thank you very much. Here is my next question. Sakuma-san, this is about Kishida-san, the previous president. About inappropriate actions or behavior that you have mentioned in your report, is there any specific statement by Kishida-san? Is there any specific inappropriate behavior by Kishida-san on multiple occasions? Is that the correct understanding about Kishida-san's departure? That is my second question. Thank you. Thank you very much for your question.
With respect to the financial report, we have had a communication with the people of the financial group. They have reported some multiple cases of Mr. Kishida's inappropriate behavior or language. Okay, I understand. Thank you. That is all from me. Thank you very much. Thank you. Next person, please. Mr. Uematsu of Nikkei Newspaper.
Hi. This is Uematsu of Nikkei Newspaper. Can you hear me? Yes, we can hear you. Thank you very much. First of all, here is my first question. With respect, the person, the PwC, you talked about the issues remaining in Nidec Group related to organizations. Did you request any specific person to be removed? I believe that was done on September 28th, which was a Monday. I believe this is a very important point with respect to the management plan of the company.
Despite ongoing auditing activities, why did you have to fail to take appropriate actions until two days before the deadline? Did you have enough communications, and were you able to establish the relationship of trust between PwC Japan and Nidec?
Thanks very much for your question. It's not just September 28th. This was an ongoing issue that we have discussed with Nidec Corporation. A sense of trust was established between us, and this sense of trust continues to be, remains unchanged, remains in existence as we speak. It's not just September 28th, and Nidec failed to make improvement because of which you could not make any report. Is that what you're saying? Well, there are some issues that could be improved quickly.
Well, not everything was solved by the deadline of September 30th.
How about the Nidec executives? You have this list of more than 70 people subject to transfer. It's a huge, long list. It was submitted only 2 days before the deadline. Were Nidec executives convinced about the list of such a long number of many people? Do you feel there's any issues with PwC Japan? With respect to this list submitted on September 28th, I do not know exactly what you are referring to. We have been constantly discussing various risks to address this particular issue. That is our understanding. Did the request from PwC come all of a sudden to Nidec? Do you realize no particular problems? We are having very firm, strong, close communications as we try to solve issues one after another. Here's my second question.
Sorry to be repeating the same question, but with respect to the resignation of Mr. Kishida, there have been some problems with Mr. Kishida's behavior and language. I believe this is within the range of investigation by the Third-Party Committee. Did the board of directors check such behavior or language? Were there any requests given to or submitted to the board of directors regarding Mr. Kishida's behavior or language? Mr. Kishida was approved at the rate of 90% or so in the latest shareholders meeting in June. Did you check everything about this behavior or language? How come Mr. Kishida has yet to express his opinion about his resignation himself? Don't you think it was necessary for Mr. Kishida to come up on stage and express his stance about his departure from Nidec?
I would like to give you an explanation. This is Mr. Minai speaking.
We have received similar questions from everyone here today in this press conference. As we have explained already, with respect to Mr. Kishida's inappropriate actions or behavior, these do not have to do with the third party's investigation. Our decision is based on the decision criteria of the board of directors of the company. With respect to legal liabilities, that's the subject of discussion by the Executive Responsibility Investigation Committee. With respect to the Third-Party Committee, they are focused on accounting-related inappropriate practices and people who should be taken as the persons responsible for those issues. That's how we organize our issues respectively. With respect to Mr. Kishida, he is not here with us today. As of September 29th, he already left this company. I'm not sure about what his intentions were, but as Nidec, we have a responsibility to explain about his resignation. That is all from me.
I appreciate for getting-- Curb your question to two. I would like to just follow up. You haven't asked any questions of the Third-Party Committee at all? Let me answer. There was an investigation report put out by the Third-Party Committee. That's something we read and we browsed. Then this time we published a financial report, and over which there were improper communication. Yes. On that account also, I read that too. We read that, too. On that point, I and we checked with the former president, Kishida. Then, did we need to hear that again from Third-Party Investigation Committee again? We didn't think so, because Third-Party Investigation Committee finished their task. Then in terms of the legal responsibility-
That's exactly under discussion in the Executive Responsibility Investigation Committee, and we are just waiting for the report to come out. Okay, so that means that you judged that you didn't need to refer to the Third-Party Investigation Committee. Understood.
Yamada-san from Toyo Keizai, a newspaper. Do you hear me?
Yes, we do.
This is Yamada from Toyo Keizai. Thank you. My first question. As an assumption, you corrected the past financial results. How rigorous did you correct this? Is this just the thing that you did as just normal business as usual thing as normal other companies? I think the JPY 600 billion was impairment losses that were based on the planning you had. How do you position this correction?
Why I ask this question is that there is excess of distributable amount. The reporter from Nikkei already asked this.
When we think about it, this is just a violation of the corporate law, and there is a compensation duty you need to incur as the member of the board of directors. I think that you said you will study that, you will consider that.
Do you think that the correction of the past financial results is exceptional case, you think?
Based on improper accounting practices, the past executives' responsibility need to be judged. Including that case, including the point you raised, the Executive Responsibility Investigation Committee will discuss that. Explicitly, this is the violation of the corporate law. This is just beyond the Executive Responsibility Investigation Committee. It's not that you have decided that you will charge for the compensation for the member of the board of directors.
We would like to wait and hear what this executive investigation committee has to say, and we would like to make decision as a company.
Okay. I would like to ask a question of Kaida-san. Somebody asked you about the impression of Nagamori-san, and he gave you the dream of being listed or going public, and you say you appreciate him. Even though with this case, it's good to hear that you appreciate for him. Even though there were pressure, there were some companies that got things right.
Depending upon the how you hear, how you interpret your words, you sound like you were affirmative of the business management model of Nagamori-san. How should I understand being separate or being disconnected from Nagamori-san's style of the businesses? How should I understand that? How should the stance vis-à-vis Mr. Nagamori change?
Some reporters asked you before that how do you see the need to give accounts on the need to have Nagamori-san, to have him answer to media outlets, but how do you see them once again?
Well, thank you for your questions. I'm trying to find and searching words, but 30-some years ago, I encountered for the first time with Nagamori-san. We were a very small company, and we just employ 40 people, but we wanted to be going public, and we were confident that we could do it, and that's the kind of confidence that he gave us as a dream. It's not anything that you see on day-to-day basis in the business environment. But the memory I had and appreciation for him at the time and my stance on him is not necessarily connected.
Well, I don't think you answered my question.
Yes, you're right. Your memory 30 years ago and going public, yes, that was ambitious, that was great. It's not that we negated everything that he did. There were some problem that Nagamori-san offered, but you don't necessarily make comments on the problems he brought about. Last year, new Nidec committee was launched as a vice chair. There was a report put out by the committee. Obviously as the vice chair, I read them. I also submitted my opinions and views to be compiled as a report. It's not that we are going back to where we used to be. We try to advocate to be a company, to be in a stage for the second phase of the founding. We need to take a grip. We need to take on a new chapter for turning this company around. That's what I meant. Okay, thank you.
Okay, I would like to take questions from the final reporter, Uchida-san from Nikkan Automotive Newspaper. I would like to take questions. Thank you for your waiting.
Thank you. This is Uchida from Nikkan Automotive Newspaper. Do you hear me?
Yes.
Thank you. I got two questions, too. First, in automotive business, NPe's Stellantis joint venture or joint venture with the Chinese companies. In order to dissolve this joint venture company, I guess you're going to be fully engaged in discussions. I guess this is a part of the engagement and commitment that the former President Kishida had. Is there any change that you have in the directions as you have the new leadership?
The point is a change in management. NPe's business direction itself will remain unchanged.
Do you receive any reactions from these joint ventures?
Not yet, so far.
Here is my next question. With respect to the approval of Mr. Kaida as the new president, is it going to be a so-called one-point relief in case of an emergency? Or are you going to toss the button over to another successor sometime in the near future? Or are you going to be long involved in the company's preparations for the midterm, long-term business plan? Kaida-san, what is your personal opinion about your tenure as president? Also, how are you going to train people to become presidents in the future of this company? I would appreciate your opinions from Sakuma-san as the chairperson of the committee. Thank you.
First, we need to establish this midterm, long-term business plan for the next three to five years. First, we need to establish a very good team, a group, a team of people. That's my critical mission as president of the company. Also, we need to train people. We have this, of course, succession plan that we are going to need for the entire Nidec Group, as well as for the people outside this group, so that we can further improve the value of this company. That's a part of my mission, too. I would like to have someone better than me succeed as president of this company. That's the part of the company's policy. We like to select someone who can improve this company's corporate value, and that's what we need to do, and that's what I believe we need to do.
This is Sakuma speaking in response to your question. Thank you very much for your question, first of all. With respect to Mr. Kaida, we are going to have an extraordinary session of shareholder meeting scheduled for December. We are planning to submit our proposal regarding Mr. Kaida. This is just the plan at this moment. After the shareholders meeting, we are going to have a board of directors meeting to select Mr. Kaida as a member of the board of directors of the company. In the next shareholders meeting, which is going to take place next year, what we need to do is to discuss going forward. As I have been explaining during this press conference, as an emergency measure, we started looking for candidates as the nomination committee. Nominations committee's mission is to identify appropriate candidates, and we will continue to search for future candidates.
That is what we need to do. That is what we need to propose to the members of the nominations committee.
Have you or have you not made any list of candidates at this moment?
Well, as of now, if I may go into details, we are examining some possible candidates, but we do not have any specific plan for these candidates at this moment.
Thank you very much for your answers. Thank you.
Thank you very much. This concludes today's press conference. Thank you very much, everyone, for your attendance today. Thank you very much. Thank you.