Nidec Corporation (NJDCY) Earnings Call Transcript & Summary

Thank you very much for waiting. Now we'd like to start the press conference on the results of Nidec Corporation's improvement plan and the statutory report. Nidec's presenters are as follows: Mr. Mitsuya Kishida, Representative Director, President and CEO of Nidec Corporation; Mr. Kazuo Nakagawa, Vice President and Deputy CFO of the company; and Mr. Masayuki Minai, Vice President and Chief Compliance Officer of the company. I'm Keita Watanabe of Nidec Corporation's Corporate Communications Department. In this press conference, first, Mr. Kishida will deliver his opening remarks, then explain the improvement plan that the company has announced today, then we will entertain questions. Please wait to ask your questions until then. Now Mr. Kishida, please.

This is Kishida, the company's Representative Director and President. First and foremost, we must deeply apologize to our shareholders and investors, people of the market, including those of the Tokyo Stock Exchange and business partners for having caused tremendous trouble due to the fact that we had to postpone the timing to disclose our earnings report for quarter 3 of fiscal year 2025 as we were unable to properly disclose our earnings information for this fiscal year and also due to the fact that our stock was designated by the Tokyo Stock Exchange as a Security on Special Alert. Today, we submitted our improvement plan to the Tokyo Stock Exchange. This plan is intended for a fundamental reform of our internal management system and other elements to have our stock Special Alert designation lifted. The investigation by the third-party committee is still ongoing. On the other hand, we must complete our actions to have the Special Alert status lifted by the designated deadline. We must be reborn as a company that always does what is right. This is why we submitted our improvement plan today as we explained that we would in the month of November, even though the third-party committee's investigation is still ongoing. Not to influence the third-party committee's investigation, the Nidec Corporate Reform Committee, which prepared the improvement plan, does not handle individual matters. Instead, they use our company's systems, rules, organizational culture and other background information to analyze the causes of our problems and prepares to implement the improvement plan. We were informed by the third-party committee that we will likely receive their initial investigation report towards the end of February. After receiving the initial report, we will promptly release and explain it to the public. In addition, we will reexamine and review our improvement plan based on the third-party committee's investigation report. Nidec's executives and other employees will stay committed to designing an internal management system, reforming our governance and organizational culture and working on other parts of the improvement plan. We would like to thank you in advance for your continued support. Thank you very much. Now please allow us to sit as we explain the details of our improvement plan. [ Now Mr. Kishida continues to explain the details of the improvement plan. ] From here on, I will explain the background information about this improvement plan and also, I would like to explain the events that have materialized so far. I'd like to give you a schedule going forward as well. We established a third-party committee on September 3, followed by different events such as the submission of the Securities Report as well as on October 23, revision of the year-end dividend forecast and the forecast of consolidated financial performance. And we have been focused on doing everything we can as promptly as possible. And on November 14, we submitted our policy for our improvement plan, and we submitted our draft of the improvement plan on December 12, and we submitted our improvement plan today, January 28. And this Nidec Corporate Reform Committee was established on October 30. We will have the highest ethical standards, and we will prioritize doing what is right as a company. This is the purpose of this committee rebuilding Nidec as the company that prioritizes what is right with the highest ethical standards. And we have the next-generation young employees, and we are making a group-wide and global efforts. Please take a look at the middle section of the slide. We are working on systems -- we like to make sure to prevent all the negative incidents from happening. Corporate culture. The organizational culture has to be improved. Today, we have gone beyond the various borders, and we have the mid-level employees and others leading all the discussions that were taking place in-house. 13 people are the core of the members of these committees, and we have been working on a global basis. We have established multiple working groups to have engaged in active discussions. And we have lacked such a level of enthusiasm about the discussions, and some people were hesitant at the beginning -- in the beginning, but we have taken enough time to have discussions every day to be able to submit this plan today. When it comes to this investigation, we have interviewed various people to understand the background information to analyze why this has happened -- the problems have happened. And we also discussed how we can prevent the recurrence of those problems. And this is how our plan was made. We have had the group-wide meeting several times a month. We had the entire floor available for all the discussions so that we can have transparent and honest discussions. And then in order to implement that plan, so we are going to do the monitoring as well of the improvement plan. And this is the improvement plan. The major points are as follows. On November 14, we had explained about that. But as for the system and process and the culture, so those are the challenges that we have. And we said that we will be challenging those barriers and that we would be having the discussions from within the company. And then we would evaluate the challenges and have the analysis for the 6 major causes of the issue. And we still need to have the research from the third-party committee. But then if those doubts are true that we have about the company, then we should need to have the analysis and the root cause of what has been causing that kind of action, so that we should need to prevent the recurrence of such. And then we should need to implement and come up with a plan. And then for the improvement plan itself, there are several issues that we had already made public, and then we are putting much emphasis on the doubts coming from within the company so that we can have the autonomous kind of improvement and the measures going forward. And what had started this is the FIR issue, improvement measures and status of the FIR. So about the duties, tax, and we are going to prevent the recurrence of such issues as not paying the proper tariffs. And in order to have the measures, to have the questions regarding the improper tax, we can have from A to F of those suspected improper accounting practices. So those are the improvement measures of 6 ones. And then we are going to go through the accounting and corporate culture and governance, internal audits, whistleblowing and disciplinary measures and lastly, clarification of responsibilities. So this is improvement measures based on suspected improper accounting practices that we have made as concretely as possible. And in coming up with a plan, we have in the midterm plan, so that we have the evaluation and then "do it in a bottom-up" kind of a way. And the accounting system, those 6 points about the accounting practices, so that should be independent. And the corporate culture, so that we can have a fair, discreet discussion. Then governance, so that we can have the initiative on a medium- to long-term perspective so that we can have the internal audits on an autonomous way. And then the last one is to have the responsibilities based on the results and implement appropriate disciplinary actions on target individuals. I would go into more depth about A and B for myself. So A is about plan formulation and performance management. And what is most important is the midterm plan. So the process to coming up with a midterm plan must be clarified. And then on fiscal 2026, the plans for fiscal 2026 should be based on this new process to implement the process and then to get the results. So this 2026 plan, after this, so we had the valuation, which is to say just the sales results. No, not just the sales results, but based on that cash flow and ROIC and then to do it in a correct way, so that we can have the qualitative review of the KPI, so that we can have the valuation and base our decisions on the valuations of KPIs and other measures. So about the accounting measures, so this should be -- accounting functions should be autonomous. So this is also the issue of the system and about the rules in implementing the accounting. And as for the rules, so there has been many reports that requested for the excluding as the extraordinary, but we are going to abolish such kinds of ways to request. And then we're going to have this issue -- setting up of the rules in a transparent manner. And then from A to F, we would incorporate that. Then today, so there are question about measures. But since we had not been able to be up to par, so we had vulnerability in the system. So that we really seriously acknowledge this fact so that we want to do it in a correct, right way so that we can have that implemented as the structure that can be actually put in place. And we'll be working towards that end to reform that. And then I talk about the upcoming schedule. So today, we had put the first report of the improvement plan. And then in -- at the end of February, then we would have the reports about the research conducted. And then on the end of February, we would have the certain report by the third-party committee. And to have the results of the current investigation -- will be compiled and received. And then later on, about the concrete numbers that had been affected by those acts. And on October 28, we have the submission of the internal control system confirmation to the TSE. And the third quarter financial results, so we had been gone over 45 days so that we'll be announcing about the related announcement of the financial results of the third quarter. Then so the circumstances, the business overviews. And under any circumstances, we will continue to do business with our customers and suppliers wholeheartedly without delay with sincerity and continuity. There are several business overview that I'd like to report upon. So order status, order itself remains quite strong, and there have been no major changes to the production plan. As for the operational status and the AI-related growth and the cooling facilities and also the emergency electric power source and batteries. So we want to have those electric measures that is still having quite strong orders. And then based on that and the facilities in place, so that the production bases are operating normally and have maintained supply capacity. About the IT and system of the cutting-edge facilities and about supply, we have the United States and India, we are going to have the expansion. And for those factories that are going to be expanded overseas, we are right on schedule in expanding our facilities overseas, in United States and India, as I said. And about -- there's no concerns about the availability of borrowing facilities and cash on hand. And there is no hindrance to business operations. No worries about cash flow. And we have ample cash, and we can have smooth operations that I'd like to stress here. And going forward, the third-party committee research investigation report would be made public, and we would be sincerely reflecting that on the further improvement plans, and we'll be swift in implementing those. And through a series of initiatives, we will strive to restore trust as soon as possible by improving the soundness and effectiveness of internal management systems and working together as a company to ensure the implementation and operation of improvements towards the de-designation of Nidec stock as a Security on Special Alert. That concludes my announcement.

We'd like to go to the question-and-answer session. If you have any questions, please raise your hand. Please take your organization's name and your name. As we want to answer as many questions as possible, please keep the number of your questions up to 2. Thank you. Also, this is a joint press conference with mass media outlets and analysts, so we'd like to call on you one by one. And we'd like to entertain questions from media outlets first, please. The first person on the front. Thank you.

This is [ Ashar, Kyoto Newspaper ]. Thank you very much. You have talked about the hearing sessions with the Nidec Corporate Reform Committee. Have you had interviewed with -- Mr. Nagamori as well?

Let me report that to you. And Minai-san will have some additional information for you, if any. When it comes to Mr. Nagamori, he was subject to -- he is subject to the investigation by the third-party committee. So Nidec Corporate Reform Committee is not interviewing him, Mr. Nagamori. Yes, the reform committee is about the process, corporate culture and systems. And they are focused on having a deep analysis of these elements, not on who did what, when, et cetera. Even without those instance by -- caused by these people, we -- this corporation, Nidec Corporate Reform Committee, is to check to see if everything has been okay or not. So Mr. Nagamori has not been subject to interviewed by the Nidec Corporate Reform Committee.

Please go back to Slide #5. This is Mr. Minai speaking. When it comes to the interviews by the Nidec Corporate Reform Committee, as has been explained already, we are focusing on systems, corporate culture and systems, as you can see on the slide here. It is these areas where our compliance-related problems tend to occur. And we have done in-depth analysis to identify problems and issues. And as you can see, you have many working groups here. There is a total of 9 working groups. We have governance, is the first one on the left. And in this group, they are focused on finding weaknesses with our system and what can be improved. And accounting working group, on the other hand, was focused on roles, operational roles, and on understanding if there is any block -- anything blocking this type of efforts for improvement. And on a group-wide basis, they have -- global basis, they have identified issues and problems.

There is one more question from me. When it comes to this improvement plan, there is some statement about Mr. Nagamori's results-oriented policy. Mr. Kishida, how do you see -- how do you assess Mr. Nagamori? Please give me Mr. Nagamori's pros and cons.

Mr. Nagamori has grown Nidec to be this large. About that, I have a huge respect for him. However, back in November 14, as I've said on the date, it's not about the specific individuals, but when it comes to the organization as a whole, there has been excessive pressure constantly. That's one of the reasons for issues that we have had in our organization, and we have been excessively focused on short-term profit generation. Because of that, we have lacked enough attention on long-term investment, research and development, et cetera. That could be the case. That's something that I'm suspicious about. So in this Nidec Corporate Reform Committee, they have focused on those issues, and they have incorporated those issues as part of the improvement plan.

Yes. So I'd like to call on an analyst, so somebody who's sitting in the front row.

Yes. I'm from Goldman Sachs. My name is Takayama. And initially, the reform plan that you have put forward now is from the third-party committees. They have not grasped the details of that, so that -- you don't have the backgrounds about that. But after the February end, and you're going to have the improvement plan after the report on that, then there's going to be something that's very different. And then you might have to do it all over again? Or is there any kind of consistency or the framework that you have continuing or -- so to the TSE, well, so it's going to be de-designated as the stock on Special Alert, and then you are going to have some kind of a goal. So that you want to have? And about the third-party committees and the reform plan, how kind of a balancing do you have on that or coordination you have on that?

Thank you for the question. So during this activity with the third-party committee and also the TSE, we are going through the exchange with them. And from the third-party committee, yes, on the end of February and also the numbers report, yes, we are putting forward that after end of February. But after that, well, the real question is how do we acknowledge the challenges that we are facing? And in any case, we are going to be asked about that. And this improvement plan that we have put forward now, so that, of course, we had reported to the third-party committee, and based on that, we are going forward with this. And as a company, it's not that we will be having a completely different report or plan. But of course, that is going to be based on the third-party committee report. And then we are going to have some additions to that. But this is what we have put together as what we acknowledged. And as for the TSE and after the October 28, after we had been designated as the Security on Special Alert, we had gone through the draft and the basic plan, we had exchanged with the Tokyo Stock Exchange about that. And now we are in this position today. But about the facts that we had put forward, it's not that it is complete or it is perfect, so that we are going to improve what we should improve. Yes, if there is anything to add from Mr. Minai?

Yes. What I'd like to supplement on that for myself is that the third-party committee, so the autonomous or the independence, is assured on that. And then after the interviews, we had noticed the issues that we had, and we had already reported to the third-party committee. So that the third-party committee had listened to us and our communication. And it is -- well, finally, how they're going to make a decision is up to the third-party committee to decide. But as President Kishida had said, so the final report, if there are issues that are lacking or the issues that are not complying, well, we would speedily receive that sincerely. And then after implementation, if there are problems that have not been corrected, then we will be having opinions from others so that we can have a better improvement of us.

So the third-party committee, of course, you're having a communication. So maybe you cannot have a very detailed communication, but the issues that you can think about is out on the table. And from the third-party committee, probably, would have a more detailed -- but this is some kind of a best guess that you have put forward. Is that the correct understanding? So is it within the framework?

I don't think I can say that from myself. But at least from us, we had acknowledged what are the issues. Well, we cannot correct what we don't acknowledge as issues. So those things that are in front of our eyes, and we tried to put forward all the kinds of issues that we have, and this is the report that we have come up with, try to incorporate as much as possible.

And another question from the financial industry. So I think it's about the business performance. And second quarter -- up to the second quarter, is the numbers that we say, about JPY 57 billion operating profit. So this time around, and if the business performance goes back to normal, so I think the -- your real business performance does not contradict that or -- that much. But for the corporate bond -- sorry, the automobile vehicle-related business and electronics -- so the electronics, so we can have the JPY 57 billion cash flow. So do you have the actual power? Or -- I don't have the numbers, but I want to confirm your real pillar of performance. So the road map going forward is going to be the financial reporting at the end of March, and then you have to have -- within 90 days, it means end of June, you have to do reporting. But until that time, so that you have the numbers from the past results. So that you want to go back to the correct advice, so that we can have this accounting for the fiscal results and also to have the guidance for the future performance. So is that the kind of a road map that you have in mind? Is this the correct understanding?

So I think you have 2 questions. So first is about the good parts, so that I had given you several examples, but what about the other businesses and the schedule going forward? So I think I would look to that. And then after, the schedule. So Minai-san and Nakagawa-san will talk about that. And also the performance of the business, well, the -- including vehicle automotive-related business and also the household electronics. So we have the business plans and the structural reforms. So we are already planning that. And aside from that, we have the schedule on time, yes. And that I'd like to report to you about. And also about the vehicle automotive-related business is a very severe marketing. And not everything is going on schedule. But -- the structural reform. So structural reform and also to change the structure. So those initiatives that we have carried, yes, we are doing on our plan. So maybe Mr. Nakagawa can tell you about that.

So I want to supplement about the schedule. And so we have the third-party committee, and third-party committee is trying to get at the root cause of the problem, but it's taking much time. But it means that everything that we should have the issues and to have the financial reporting so that we need to have the audit, and it is a very time-consuming process. So that's how we feel about it. And about the audit, the PwC, that is the auditor, says that the third-party committee results, they would acknowledge. And then we'd have -- we evaluate the risk evaluation. And then they would decide on as to whether they would have to do additional auditing or not. And as for the result, it depends on how it is on the issue, but I think it will take more time. And in any case, the third-party committee, we would need to ask to have the results from them and then look at the issue once again and then to have the results shared with you.

A person in the white dress over there.

This is [ Se of Asahi Newspaper ]. I'd like to give you my first question as follows. When it comes to the analysis of the causes of the problems, you talked about the some business plan was made to expect Mr. Nagamori's expectations, and you were not allowed to deviate from Mr. Nagamori's expectations. You have had some midnight meetings, trying to keep up with Mr. Nagamori's expectations. And when it comes to M&As, Mr. Nagamori and a few people would only know about those upcoming M&As. Those lessons were described, and that's something that I can evaluate positively as a journalist. But back in 2022, I believe you joined Nidec, have been 4 years since then. And over the past 4 years, Mr. Kishida, have you seen this company, this Nidec, as a company? And how do you evaluate the Nidec so far? And I believe you have been in a very close communication with Mr. Nagamori. But did you realize all those problems? And did you raise those problems to Mr. Nagamori in the past -- over the past 4 years? And can you evaluate yourself?

Thank you very much for the question. Including myself, the third-party committee has been investigating various people. So I would like to wait for the report to be coming from the third-party committee. In order for me to look back my past, over the past 4 years, I myself have been actively engaged in improvement activities, in my opinion, but we would like to have some opinions of the third-party committee about these activities.

So in other words, you cannot answer the question at this moment. Is that right?

I don't think I have been able to experience everything about the Nidec over the past 4 years. I'm not going to make any excuses about it. I, as an executive of this company and over the past 1.5 years as a President, I have been managing this company. Therefore, I'm not going to make any excuses in any area. So I believe including that point, I would like to have third-party committee evaluate everyone and everything, including myself and my job.

Here's my second question. The other day, Mr. Nagamori retired from the office of the Chairman of the Board of Directors, and he issued a handwritten message to the public. The public's evaluation of Mr. Nagamori is that he has been at the top for a longer time. So before the third-party committee came out with a report, he resigned, but he should have explained many different information before he quit. That's, I believe, is public's opinion. Kishida-san, what do you yourself think about Mr. Nagamori's resignation as well about Mr. Nagamori's promoting himself to the position of Chairperson Emeritus. After the report is issued, I believe there is some disciplinary actions to be taking place, including Mr. Nagamori as the Chairperson Emeritus. Would you say that he, Mr. Nagamori, himself will be subject to disciplinary action?

Thank you very much for your question once again. With respect to Mr. Nagamori's resignation, here is my opinion. And when it comes to the third-party committee's report and thereafter, what's going to happen, that's your second question, I believe. When it comes to Mr. Nagamori's resignation, Mr. Nagamori has made some comment upon resignation, including corporate culture, everything is at issue at this moment. Many people are talking about it, and he feels partially responsible for having fostered, nurtured such a corporate culture. And we accepted Mr. Nagamori's offer of resignation as it was submitted to the Board. When I became President of this company in 2024, we have started taking the responsibility as the management. And Mr. Nagamori is no longer a part of the Board of Directors, and all the responsibilities are now upon our shoulders as the company's management. This Chairperson Emeritus is just honorary position without any responsibility about the management of the company. Mr. Nagamori, will he be subject to the disciplinary action by the third-party committee? The third-party committee is not going to specify any individual. All the people will be subject to the assessment by the third-party committee. And the actions will be all the people, not just Mr. Nagamori. Nagamori-san is no exception. No exception exists. Everyone is subject to the assessment by the third-party committee.

All right. Next to analysts. Yes. So the person raising hand.

I'm from Morgan Stanley. My name is Sato. And first question is, on September 3, the setting up of the third-party committee. Before that, so the Chairperson Emeritus, Mr. Nagamori had the NKK conference very frequently, I understand. But the third-party committee, after that was set up, then what has happened to that kind of a meeting. And now what is the communication of -- what is the exchange with the Mr. Nagamori after he became the Chairperson Emeritus? So he has 12% of shareholdings since he's founder and as the stockholder, Mr. Nagamori and this -- how do you have the communication with the Chairperson Emeritus, Mr. Nagamori, as Board Directors and the management?

Yes. Okay. So I would be answering the question and if necessary, Mr. Minai would be supplementing that answer. Well, first of all, on September 3, after the third-party committee was set up, so NKK was continued. But then on December 19, after he had retired or stepped down, we had stopped this NKK. And this communication, we have not had this kind of a -- constant kind of a communication. And then as a large shareholder, how do we go about it as management? Well, Mr. Nagamori, now, in the present day, has no involvement to the management of the company. So he has no power or the responsibility so that we don't communicate to him about the management. But for a very long time, so for all the shareholders, we had been corresponding them. And as a stockholder, yes, of course, we would continue to have relations with him. And for the other stockholders as well. So it's the same kind of a correspondence that we'll be having as one of the shareholders to Mr. Nagamori.

All right. So the second question that I have is about 2015. So the Toshiba had the third-party committee. And then before the report came, 2.5 months had passed since -- until the report came out. And then about the past performance, so it still took 1 more month in order to come up with the financial reporting. In your case, so the third-party committee, the first report until that comes out, so the 6 months, why did it necessitate so many months. So what was the backdrop? What was the background to that?

Okay. So first, Mr. Minai would be talking about that. And then if necessary, I'll be supplementing.

Yes. So I myself, Minai, will be explaining about that and [ in one word ]. So because there was so vast amount and -- vast length of time that had transpired so that we needed time to look over this. And for the global, 300 bases we have and the 300 corporations, we had to evaluate and to look at it as something that needs to be corrected. And then in the past, 5 years -- no, 10 years rather, so that third-party committee said 10 years is going to be the subject of the scope of the investigation. So if there's anything improper going on, they needed to look into it. So in doing so, for the global basis, we have this possibility. So since we have this third-party committee in place, so that we should investigate in detail to all the basis so that we can become accounting that is relied upon reliable, trustworthy to everyone.

Yes. No supplement from myself. Thank you.

Next person from the media outlet, the person right next to the previous speaker.

This is [ Kodai ] of Nihon Keizai newspaper. When it comes to PWC Japan, I would like to ask you a question about it. When it comes to PWC Japan, in securities report for this fiscal year as well as they continue to have the disclaimer of opinion. And [ Minami-san, ] the Chairperson, says and that the -- there is a very heavy comment from the person saying the disclaimer -- about the disclaimer of opinion and PWC cannot express their opinion about Nidec's financial report because Nidec has not been able to provide them with very sufficient opinions. How do you think about the disclaimer of opinion by PWC Japan?

Nakagawa-san will -- Mr. Nakagawa will explain -- answer the question.

We are having the communication with PWC Japan. As an audit firm, they would like to wait for the report to be coming from the third-party committee. And they have -- the PWC Japan has this disclaimer of opinion. We have information disclosed about it. At this moment, we have this third-party committee in place. And that's one of the reasons for the delay. PWC Japan is waiting for the activities to be completed by the PwC Japan. When it comes to PwC in Japan, we are not in a position to answer any questions regarding PWC Japan.

Here's my second question, which is about Mr. Nagamori, who is the Chairperson of Emeritus. As has been -- the previous speaker asked you, he still have this -- a little more than 8% of the entire share of the Nidec Corporation, and he -- no one thinks that he is totally away from the Nidec's business management. Would it be possible to delegate Mr. Nagamori's voting rights and the shareholding ownership to a third party? Would that be a possibility?

Mr. Nagamori is now no longer a member of the Board of Directors. He is not involved in Nidec Corporation's or Nidec group's business management anymore. He is one of the shareholders of our company. And just like any other shareholders, we will continue to have dialogues with the shareholders, including Mr. Nagamori as a shareholder.

All right. So we'd like to call up on analysts. All right, so please.

I'm from Mizuho Securities. My name is Goto. And one thing I'd like to ask is, well, so that you had analyzed the root causes, so that you had listed the challenges, but at the same time, so the management system that had occurred in the past, there were some benefits from that also. I think that must have been the strength in the past system. So if you're going along with the improvement plan, so how do you treat the parts that were good that were -- and then I think this kind of reform would warrant everything in the past to be changed, but I think there has been some good point from the past practices.

Yes, thank you for the question. Yes. So now in a time like this, in order to do something, then we lose something, but then this is a recurring theme. But first, I'd like to say we want to do everything right, and that should be the focus and that should be the central issue. So if there's anything that can be lost, then that is something that should have been lost. And first and foremost, we have to do things right in a correct manner. And that is the focus of our policy. Thank you.

Person from the media outlet. That person, second from your right, the person there, the fourth row.

This is [ Kanai ] of Yomiuri newspaper. You are having this cause analysis, and we have this very detailed analysis performed already. But among the Japanese companies. And there was a very strong leadership at the beginning of your company's history. And you have showed a very strong profitability growth. And I believe there has been a tendency among very -- many different Japanese companies. And among the Japanese executives in your company, I believe, in your company's executives, many people have been having some issues in my mind -- in their mind, but what is the difference between your company and other companies?

When it comes to corporate culture, corporate culture is different from company to company. So I cannot really overgeneralize about what's good about Nidec and what's not so good about Nidec. I cannot say that. What we need to do is to launch a fundamental reform as part of the activities to be exercised by this -- the third-party committee. We're going to go into the next phase of our company's history. We, ourselves, are the ones who are going to make changes. And the future Nidec will be created by us. The basis of the future creation has to be studied by us. We need to do everything in the right way all the time. That's the type of new corporate culture we would like to establish.

And there is one more question from me. When it comes to the results of the analysis, I believe everything has started with this suspicious, inappropriate, improper accounting practice. Turnover ratio could be the one issue and relationship with the subsidiaries is another issue, excessively aggressive price negotiations. And there could be various factors like that and there are some opinions expressed about aggressive price negotiations, but what is your opinion on those points?

I cannot give you any specific examples on this occasion, but those things have been a part of our corporate culture, I believe. But at the same time, I would like to say that we like to establish a corporate culture in which anyone can say anything about anything. We would like to improve our whistle-blowing system, so that someone experiencing trouble can report such trouble to other people. That's the part of the basis of fundamental reform that we like to achieve, system and the culture of what we would like to establish as we speak right now.

One more thing that I'd like to check with you. When it comes to the third-party committee, is it focused on accounting issues or is the focus on any other issues at all?

This is Minai. The third party committee is focused on accounting issues only.

Yes, from analysts, anybody? Yes.

Yes, from UB (sic) [ UBS ] Securities, my name is Hirata. You said about the schedule going forward. I think there was a question. And I think I'd like a comment on that. And the audit committee, so for them to give the report, it takes some time. But at end of February, there is going to be a certain report from a third-party committee. And then you are going to have the assessment of the amount of money that's impacted. But then the timing, when is that going to be? When can we assume that to happen? So that the first stage, the February end, is that going to be a press conference style so -- that you'll be releasing?

Yes. Well, as of February end. After that, well, how are we going to cope with that is -- I think that's the question that you're posing, but we still have not -- we are still not prepared to answer that. But based on the February end report, then we would make it public, and then we would have the press conference. So that's something that we have in mind.

All right. The person from mass media, the person wearing glasses.

Yoshida. This is Yoshida from the Market News. I'd like to give you a question from the previous press conference. When it comes to M&A, you have frozen M&A projects at this point, but is the situation remaining unchanged? And what specific conditions? Do you still have the M&As frozen? Well, when it comes to Slide #25 of the report, which is something that another person has just mentioned, a person has dominating the documenting and there has been insufficient portfolio-based analysis. Mr. Nagamori has been engaged in M&As so far, and he has been leading those efforts. He has led those efforts in the area of M&A. Do you think you should make some reform in the area of M&A? Or are you going to make any slowdown in your pace of M&A going forward? What is your strategy about future M&A as Nidec? Are you going to slow down the pace of M&As? Will we be able to see any changes in your company's M&A strategy?

This is something that I've talked to in previous press conference. When it comes to M&A, dividend has been stopped. It's now down to 0. There is no chance for me to make -- launch any new M&A. The situation remains unchanged. For the time going forward, we haven't decided anything about the future of M&A strategies of Nidec. We will continue to have discussions constantly.

I'd like to make a follow-up question. When it comes to this report, there has been some issues -- seems to be some issues with M&A according to this report. Are you going to make any corrections about the M&A strategy of your company?

Not just M&A, but we would like to cover all the different management-related issues in the meeting called Executive Management Meeting or EMM. And that's the type of change we are going to make, and the way we hold the meeting is going to change going forward. Thank you. Thank you very much.

Anybody else who has any questions? Yes, so that -- the person on the right-hand side, so the second row from the front.

Name is [ Anri ] from TV Tokyo. So first question is to President Kishida, and the improvement plan, looking at that, so it seems that there has been issues in many places. So from the top down or the governance vulnerabilities. So there has been issues in a wide variety of things. So what did you think, honestly, looking at this? And related to the last question, so about Mr. Nagamori, how is he going to be treated? So about the improvement plan. So it seems the corporate culture kind of a top-down has been an issue. So I guess such kind of background. So Mr. Nagamori, what about the significance of him remaining as the honorary chairperson or the Chairperson Emeritus?

So as for the first point, well, in November, it has been continuing that -- I had been stating this. But the challenges facing us is the system based and the processes in the system. And everything that is surrounding that is the corporate culture. And we had set six issues is system, process and corporate culture. Those can be cumulated as such. And then this kind of root cause, we have to touch on those root causes of the issue. So whether it's time consuming, we have to challenge that. Otherwise, the corporate culture would not change. And we had been going forth with that. And in this discussion, we have seen those root causes. So how do I feel about it? No, it's not that way, but those are the very basic root causes. So we should grapple with them. So that's the acknowledgment that has not changed from me. And as for Mr. Nagamori, how are you going to respond with him? So he has retired from the Board of Directors, completely retired from the Board of Directors. So he has no involvement in the management. So it's just an honorary position.

And another question I have is about the midterm plan. How do we go about it? And the improvement plans says the midterm plan, thinking itself should be changed. And then -- so fiscal 2026, yes, we're going to change. But changing the way of thinking. So the midterm plan, so compared to what is now revealed, is it going to be more conservative? So can you talk to us about the thinking itself?