Seeking New Growth, Ricoh to Spend Some $1.8 Billion on Mergers and Acquisitions

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The Nikkei Asian Review reports that, after years of cost-cutting, Ricoh Company of Tokyo, Japan, is set to spend $1.8 billion on mergers and acquisitions as it seeks new avenues for growth.

Ricoh President and CEO Yoshinori Yamashita also said at a news conference this week in which he outlined Ricoh’s new five-year business strategy, that Ricoh’s businesses would not be threatened by Fujifilm’s  proposed takeover of Xerox, a move that would make the combined Xerox-Fuji Xerox the world’s largest maker of copier/MFPs.

 “We will shift the focus of our strategy toward growth,” said Ricoh’s Yamashita.
Ricoh’s new five-year new plan calls for more spending on mergers and acquisitions (M&A) in order to lay the foundation for expanding Ricoh’s business beyond copiers and digital services. Ricoh will allocated an M&A budget of over 200 billion yen ($1.82 billion).
Ultimately, the company envisions group sales of 2.3 trillion yen and operating profit of 185 billion yen in the year through March 2023.

If successful, Ricoh’s share of office equipment in overall sales would fall below 40 percent from its current 50-percent level.

Ricoh’s aggressive cost-cutting has included a shrinkage of its workforce; its workforce is expected to shrink to under 100,000 employees by the end of March 2018.

Along with its cost-cutting, Ricoh also ended financial support for its troubled Indian subsidiary, Ricoh India, the latter of which is proceeding with bankruptcy insolvency proceedings

The strategy appears to be working, as, earlier this month, Ricoh reported that sales for the nine-month period ending December 31, 2017 increased by 3.2 percent as compared to the previous corresponding period, to ¥1,516.2 billion. Sales in all segments, except Ricoh’s Office Printing segment, increased. As a result, profits increased by 321.4 percent as compared to the previous corresponding period, to ¥17.3 billion. It’s now expecting to break even, as opposed to posting a loss, as it had previously forecast, for its entire fiscal year that will end on March 31, 2018.

The Nikkei Asian Review notes, however, that the office-printing market has been significantly declining, noting that market-research firm IDC’s data indicates that global shipments of office-imaging equipment fell nearly 30 percent over the past nine years.

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