Tags: Nidec | Japan | yen | NJ

Japan’s Nidec: Manufacturing, Yen Play

By    |   Friday, 14 Oct 2011 03:08 PM

Japanese manufacturer Nidec Corp. (NJ) is an electronic component manufacturer which builds products which end up in many types of finished goods worldwide. Investors will find a cyclical stock with dollar-yen exposure, a good choice if your investment goal is a yen currency play alongside Japanese manufacturing.

Nidec's primary business is the manufacture of electric motors. Small, precision, brushless DC motors make up just over half of sales. The primary use for these motors is to power hard disk drives used in personal computers and computer servers.

The general motors segment produces electric motors for use in appliance and vehicles. Nidec expanded into larger electrical motor production with the 2010 purchase of Emerson Electric's (EMR) motor and control business. Other product segments include industrial machinery plus other electrical and optical equipment.

Each Nidec ADR share represents one-quarter of a share of the company's stock. For the companies 2012 FY first quarter, Nidec generated total revenues of $2.22 billion, up 6 percent from a year earlier.

Net income of 26 cents per ADR share was down 11 percent from a year earlier, based on dollar-yen exchange rates in effect on June 30. The lower net income was due to a drop in operating income ratio to 10.7 percent from 16.1 percent a year earlier.

However, the earnings press release noted the ratio was a return to double digit rates from single digits in the previous quarter.

Building acquisitions

Besides the purchase of the Emerson Electric business, Nidec recently purchased a division of Sanyo called SANYO Seimitsu from Panasonic. Nidec now has manufacturing facilities in 19 countries and is a leader in its specialized field of products.

The company's customers are primarily computer, appliance and vehicle manufacturers. These businesses tend to be cyclical, so the fortunes of Nidec likely will follow the cycles. Over the last five years both revenues and net income have fluctuated.

An additional factor for U.S. investors is the dollar-yen exchange rate. A weaker yen and stronger relative dollar would be a positive for dollar investors.

The company next reports on Oct. 25.

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Japanese manufacturer Nidec Corp. (NJ) is an electronic component manufacturer which builds products which end up in many types of finished goods worldwide. Investors will find a cyclical stock with dollar-yen exposure, a good choice if your investment goal is a yen...
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2011-08-14
Friday, 14 Oct 2011 03:08 PM
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