Ricoh Reports Q4 Revenue, Op Income Decrease, FY15 Revenue Growth

Ricoh Company, Ltd. reported its 4Q15 and Fiscal Year 2015 results on Thursday, April 28, 2016 (please see Figures 1, 2, and 3 below).

  • Q4 Sales of ¥565.2 billion (B), declined 2.5 percent (YTY)*
  • Q4 Operating Profit of ¥16.8B, declined 43 percent (YTY)
  • 2015 Fiscal Year Sales of ¥2,209.0 billion, increased 7 percent
  • 2015 Operating Profit of ¥102.3B declined 11.6 percent
  • 2015 Operating Margin of 4.6 percent declined 0.8 points
  • Reported on Kumamoto earthquake: some buildings damaged, local sales and services activities affected, production unaffected thus far

* Ricoh has adjusted prior year comparative figures to the current year comparisons.

2016 0502 fig 1 ricoh earnings


2016 0502 fig 2 ricoh earnings


2016 0502 fig 3 ricoh earnings


Our View

Ricoh’s Q4 was not what the company expected. Year-to-year (YTY) sales, gross profit, and operating profit were down 2.5, 8.1, and 43. 3 percent. However, looking at the Fiscal 2015 basis, sales were up 2.7 percent while gross profit and operating profit were down 2.8 and 11.6 percent respectively. Additionally, Ricoh’s forecast for Fiscal 2016 was also down as well with sales down 1.8 percent to ¥2,170B and operating profit down 24.7 percent to ¥77.0B.

As such, Ricoh was well prepared to explain its three key initiatives for the near future. Ricoh calls these “actionable strategies” and are summarized below:

  1. Reinforcing earnings power for core businesses (Office Imaging) (Gross margin target of .5% increase)
    1. The plan is to roll out advanced MFPs that improve business efficiency
    2. Reinforce vertical sales – mainly healthcare, education, finance, and manufacturing
    3. Work with external partners to boost value delivered to customers
    4. Expand maintenance services beyond imaging systems
  1. Accelerate profit contribution through new businesses (Sales target of 70%)
    1. Expand value from device supply to print systems business – e.g., industrial inkjet heads and UV light curing inkjet ink to solution systems
    2. Leverage acquisitions to secure required resources – e.g., AnaJet acquisition and collaboration with Hitachi high-tech fine systems in textiles, signage, etc.
  1. Further improve and refine companywide structure
    1. Employ resources efficiently and reduce fixed costs over medium term
    2. Sales and maintenance, production, R&D, HQ functions, HR optimization, and Asset reviews

Years ago, Photizo called Ricoh the ‘sleeping giant’ since it had all of the resources required to be a leader in the imaging industry but it appeared the culture of its acquisitions seemed to hold it back.

When Ricoh acquired IKON in 2008, it achieved its highest sales at that time of ¥2,220B. From 2009 until 2014, the company sunk in its sales and operating profit. 2014 saw a turnaround in sales of ¥2,195B and operating profit of ¥120B with some help from currency. 2015 was particularly strong in sales at ¥2,209B and its operating profit of ¥102.3B gave it back-to-back ¥100B+ years. The company will have to focus on actionable strategy #3 (reduce fixed costs) in order to maintain its operating profit while it improves its sales in its MFPs, 3D printers, and services such as its new “ITKeeper” in Japan.




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