Ricoh Reports Much Improved Earnings for Fiscal Year
Ricoh Company of Tokyo, Japan, today reported results for its fiscal year that ended on March 31, 2019.
Net sales for the year were ¥2,013 billion, down 2.4 percent versus the previous fiscal year. Operating profit was ¥87 billion, a sharp improvement over the previous fiscal year’s operating loss of ¥116 billion. Profits totaled ¥50 billion, also a sharp improvement over the previous fiscal year’s loss of ¥135 billion. (The previous fiscal year’s losses involved impairment losses amounting to ¥145.8 billion incurred by Ricoh’s Office Printing and Office Service segments involving Ricoh USA and Ricoh’s IT services company in the United States, mindSHIFT Technologies- see here for more).
Ricoh also announced today that it’s included an additional loss of ¥14.9 billion in its results for the fiscal year for distressed Ricoh India, which previously was a Ricoh subsidiary and is now facing insolvency.
Ricoh says its integration or closing of production sites, narrowing of its model development, and deployment of robotic process automation helped drive a major turnaround of profitability in Office Printing.
Ricoh also continued to steadily expand Office Services earnings and invested to secure resources for operational expansion in the Industrial Printing and Other field.
However, sales in the Americas, Europe, the Middle East, and Africa declined because of Office Printing downturns that overshadowed growth in Ricoh’s Office Services and Commercial Printing groups. Sales in the Americas decreased by 1.8 percent, and sales in Europe, the Middle-East and Africa decreased by 3.9 percent.
Sales in Other regions, which includes China, South East Asia, and Oceania, were down owing to an Office Printing drop and a decrease in Office Services from the removal of former subsidiary Ricoh India. As a result, sales in Other regions decreased by 13.1 percent.
As a result, sales in the overseas market decreased by 4.4 percent.
Ricoh’s selling, general and administrative expenses fell 9.6 percent to ¥702.9 billion. This stemmed from progress in constraining expenditure through structural and business process reforms. Ricoh posted ¥19.3 billion in structural reform expenses in fiscal 2018. Reforms generated savings of ¥46.9 billion. Ricoh says it “progressed ahead of schedule in our drive to save ¥100.0 billion from structural reforms in fiscal 2017 through 2019.
Following are financial results for all of Ricoh’s business groups for the fiscal year:
Office Printing Group
Office Printing sales for the year declined 5.0 percent to ¥1,086.4 billion. Ricoh says this largely because it strategically prioritized profits over sales in negotiating deals, lowering hardware and consumables revenues, particularly overseas.
Operating profit for the group was ¥117.9 billion, versus an operating loss of ¥44.3 billion for the previous fiscal year.
Office Services Group
For the Office Services Group, Ricoh says that it “captured IT demand from small and medium-sized enterprises while streamlining operations, stepping up efforts to form business and capital alliances.”
Office Services sales for the year advanced 7.5 percent to ¥481.3 billion. This growth reflected gains in Japan, where demand expanded for IT equipment in line with enterprise work practice reforms and revenues grew for industry and business solutions and IT services.
Overseas, Ricoh says it expanded customer business support services, including for document-management services in the Americas.
Operating profit for the Office Services group was ¥14.7 billion, versus an operating loss of ¥25.6 billion for the previous fiscal year.
Ricoh says the improvement was due to higher sales and profitability improvements.
Commercial Printing Group
Commercial Printing sales for the year were down 0.3 percent to ¥185.2 billion. Ricoh says this was because revenue downturns in the first half of the year during product cycle transitions outweighed a sales acceleration in the second half.
Segment operating profit increased 8.1 percent to ¥27.2 billion.
Industrial Printing Group
Ricoh says that in this segment, it seeks to capture new markets and customers based on its inkjet print-heads technology that it says provides superior durability and which are compatible with an array of inks. It believe that we can generate new value by drawing on its printing technologies, for example, with additive manufacturing and bioprinting with 3D printers.
Industrial Printing sales for the year rose 7.8 percent to ¥20.6 billion. While Sino-American trade friction was responsible for lower inkjet head sales in the Chinese
market, sales of key inkjet head offerings expanded solidly in Europe and the United States.
While Ricoh saw increased sales of it industrial printers worldwide, the group, however, reported an operating loss of ¥7.1 billion, as inkjet head sales dwindled in China, the largest market for these offerings. Other important factors were higher product development expenses to fuel business growth and impairment of goodwill and non-current assets.
The operating loss for the previous fiscal year was ¥2.2 billion.
Thermal Media Group
Ricoh says demand has “risen solidly” for this segment due to growth in e-commerce, which has driven demand worldwide for shipping labels.
Ricoh has drawn on the materials technologies that it amassed over the years to steadily expand this business, notably by supplying thermal paper, ribbons, and other products that are said to provide outstanding resistance to heat and abrasion
Thermal Media sales for the year advanced 8.0 percent to ¥66.3 billion, due to steady growth in Japan and abroad. Segment operating profit decreased 15.7 percent to ¥4.2 billion, however, as raw materials cost hikes increased operating expenses.
This segment encompasses the Industrial Products business, which focuses on the automotive sector, and the Smart Vision business, which focuses on the real estate sector.
Ricoh says that this segment is expanding its customer base by drawing on Ricoh’s strengths in capturing and image processing technologies to supply optical devices.
In the Smart Vision group, Ricoh launched the THETA 360.biz official partner program. This application for virtual real-estate property tours has expanded business applications for our 360° camera and has been very well received.
Ricoh’s Other segment also includes finance businesses operated by affiliates.
The Other group’s sales for the year declined 15.5 percent to ¥173.0 billion. Ricoh says that this reflected the change to equity-method accounting for consolidated
semiconductor and logistics subsidiaries whose shares Ricoh transferred. In the absence of such a change to equity method accounting, Ricoh says that revenues
would have increased.
Operating profit for the Other segment increased 72.5 percent to ¥17.3 billion, a prime driver being a gain on sales of shares in Ricoh Logistics System.
For its current fiscal year that will end on March 31, 2020, Ricoh is forecasting that sales will be down 0.2 percent; operating profit will be up 15.2 percent; and profits up 25.2 percent, with all versus the previous fiscal year,
- April 2019: Ricoh Targeting Industrial, Textile, 3D Bio-Printing
- October 2018: Ricoh Reports Results for Latest Quarter and Half-Year
- July 2018: Weak First-Quarter Results for Ricoh
- July 2018: Ricoh to Build Production Facility in China
- July 2018: Weak First-Quarter Results for Ricoh
- April 2018: Tokunaga Appointed New President and CEO of Ricoh Americas
- May 2018: Ricoh Reports ¥135.5 Billion Loss for Fiscal Year