Sales up for Ricoh, but Revises Forecast to Reflect Ricoh India Losses

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Ricoh Company of  Tokyo, Japan, recently reported results for the six months of its fiscal year that ended on September 30, 2017, with sales increasing by 2.8 percent as compared to the same period a year earlier, to ¥998.8 billion. Sales in all segments, excluding the Office Printing segment increased. However, net profits declined by 9.5 percent as compared to the previous corresponding period, to ¥4.5 billion.

According to Ricoh, the Japanese economy continued to show some signs of a gradual recovery. Sales in all segments excluding the Office Printing segment, increased. As a result, the sales in the domestic Japan market increased by 5.6 percent as compared to the previous corresponding period.

According to the company, In overseas markets, the U.S. economy continued to show a gradual recovery and the European economy showed a gradual recovery, excluding the torpid British economy. The Chinese economy showed signs of an economic slowdown while other developing Asian countries are showing gradual recovery. Under such conditions, Ricoh’s Commercial Printing segment mainly increased, but the sales for the Office Printing segment and the Other segment declined.

Sales in the Americas decreased by 1.6 percent; sales in Europe, Middle East and Africa increased by 1.5 percent; and sales in the Other region, which includes China, South East Asia, and Oceania, increased by 9.3 percent.

As a result, sales in the overseas market increased by 1.2 percent as compared to the previous corresponding period.

Gross profit increased by 0.8 percent as compared to the previous corresponding period, to ¥390.4 billion, mainly due to the increase in sales.

Selling, general, and administrative expenses increased by 1.2 percent as compared to the previous corresponding period, to ¥376.7 billion.

Other income increased as compared to the previous corresponding period, due to a gain in sales of contracts by transferring customers that are provided with direct sales and service from Ricoh group to each region’s distributors in the Americas, as a part of optimization of direct and indirect sales channels.

As a result, operating profit increased by 33.0 percent as compared to the previous corresponding period, to ¥22.0 billion.

Profit before income tax expenses increased by 16.2 percent as compared to the previous corresponding period, to ¥17.7 billion. However income-tax expenses increased.

As a result, profits declined by 9.5 percent as compared to the previous corresponding period, to ¥4.5 billion.

Results for Business Groups

Office Printing

Sales in the Office Printing segment decreased by 2.0 percent to ¥559.3 billion as compared to the previous corresponding period. Gross profits declined, and selling, general, and administrative expenses declined.  As a result, operating profit for the Office Printing segment declined by 7.5 percent as compared to the previous corresponding period, to ¥50.7 billion.

Office Service

Sales in the Office Service segment increased by 9.3 percent to ¥212.0 billion as compared to the previous corresponding period. IT products and communication services increased mainly in the Japan domestic market. As a result, operating loss for the Office Service segment increased by ¥1.6 billion as compared to the previous corresponding period to ¥2.5 billion of loss. Operating profit, which was a loss  for the previous corresponding period, was ¥4.2 billion.

Commercial Printing

Sales in the Commercial Printing segment increased by 5.5 percent to ¥90.5 billion as compared to the previous corresponding period, due to the increase in sales of color cut-sheet printers’ related parts and supplies derived from installed color cut-sheet printers.

As a result, operating profit for the Commercial Printing segment increased by 137.1 percent as compared to the previous corresponding period, to ¥11.4 billion.

Industrial Printing

Sales in the Industrial Printing segment increased by 64.1 percent to ¥8.8 billion as compared to the previous corresponding period. Sales of inkjet print heads “were good in shape” and as a result, operating loss for the Industrial Printing segment increased by ¥0.8 billion as compared to the previous corresponding period, to ¥0.9 billion of loss. Operating profit , a loss for the previous corresponding period was ¥1.8 billion.

Thermal Media

Sales in the Thermal Media segment increased by 7.0 percent to ¥29.4 billion as compared to the previous corresponding period. Sales increased mainly in the Americas and Europe. As a result, operating profit in the Thermal Media segment decreased by 1.9 percent as compared to the previous corresponding period, to ¥2.8 billion, due to the development of new products and increase of sales’ expenses.

Other

Sales in the Other segment increased by 11.8 percent to ¥98.4 billion as compared to the previous corresponding period. Though income and profit in Ricoh’s optical-equipment business mainly increased, it was offset by the decline in income and profit in the camera business, due to a decline in digital-camera sales. As a result, operating profit in the Other segment declined by 59.2 percent as compared to the previous corresponding period, to ¥2.1 billion.

Forecast

Ricoh initially raised its forecast for its complete fiscal year that ends in March 2018, by taking into account the progress of its structural reforms, foreign-currency exchange rates, and the improvement in business conditions. However, due to anticipated losses of some ¥30 billion from its Ricoh India subsidiary, it revised its forecast downwards for sales, gross profit, operating income, profit before income taxes, and profit attributable to owners of the parent from those previously announced in July 2017.

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Revision to the forecast of Ricoh’s consolidated operating results for the full year ending March 31, 2018 (April 1, 2017 to March 31, 2018)

Net sales
(Millions of yen)
Operating profit
(Millions of yen)
Profit before income taxes
(Millions of yen)
Profit attributable to owners of the parent
(Millions of yen)
Earnings per share attributable to owners of the parent-basic
(Yen)
Forecast announced in April 2017 (A) 2,000,000 18,000 13,000 3,000 4.14
New forecast (B) 2,040,000 10,000 4,000 -7,000 -9.66
Increase/decrease (B-A) 40,000 -8,000 -9,000 -10,000
Increase/decrease (%) 2.0 -44.4 -69.2
(Reference) Results for the full year ended March 31, 2017 2,028,899 33,880 29,955 3,489 4.81

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