Last Update: March 5, 2025
| You did not present a progress report on the Corporate Value Improvement Project in your results briefing for the third quarter of fiscal 2024. Can we assume that all of the project’s initiatives are on track? |
| Everything is going well. It is also worth noting that on February 13 Oki Electric Industry Co., Ltd. announced its intention to join ETRIA. We launched that joint venture company as part of the transformation of Office Printing business structure under the Corporate Value Improvement Project. We plan to present our next progress report at the full-year results briefing for fiscal 2024. |
| What were your third-quarter financial gains from the Corporate Value Improvement Project, and what segments did this encompass? |
| The gains totaled ¥7.0 billion, including ¥4.5 billion from optimizing sales and services structure in RICOH Digital Services. Another ¥1.5 billion came from RICOH Digital Products, covering the transformation of Office Printing business structure through the ETRIA development and production joint venture. The ¥1.0 billion balance stemmed from such efforts as optimizing R&D and supply chain management across multiple segments. |
| What Corporate Value Improvement Project-related costs did you incur in the third quarter, and in which segments? |
| Corporate Value Improvement Project costs were ¥5.2 billion. Around ¥4.0 billion of that amount was under Eliminations and corporate for the Second Career Support Program in Japan. The remaining ¥1.2 billion was for ETRIA and such efforts as a sales and service structure review. We posted expenses to the relevant segments. |
| What’s the sales outlook for ETRIA next fiscal year? Around how much should Oki Electric add to that company’s revenues after joining in October 2025? |
| Since Oki Electric Industry Co., Ltd. has yet to come on board we cannot provide specifics at this juncture. That said, materials that Oki Electric Industry Co., Ltd. has disclosed show that the unit that would become part of ETRIA posted ¥36.6 billion in sales in fiscal 2023. |
| RICOH Digital Services posted a cumulative operating profit decline of ¥5.5 billion in the first three quarters of this fiscal year after factoring out Corporate Value Improvement Project costs. Page 7 of the results presentation titled, Consolidated Results for Nine Months Ended December 31, 2024, indicates that this decrease was due largely to a ¥11.9 billion decline from Office Printing and other areas. If the pace of such a decline were to continue, wouldn’t it be hard for RICOH Digital Services to increase earnings in the absence of further growth in Office Services? |
| The breakdown of the change in earnings for Office Printing and other areas at RICOH Digital Services reflects not just Office Printing but also expenses for the entire segment. This fiscal year, the earnings decline has been larger year-on-year owing to higher costs associated with inflation and wage hikes, as well as weaker non-hardware sales. Still, earnings declines shrank from ¥7.8 billion in the first quarter, to ¥3.2 billion in the second quarter, and ¥900 million in the third quarter on the strength of our sales and services structure review as part of the Corporate Value Improvement Project. At the same time, Office Services earnings rose a cumulative ¥6.4 billion in the first three quarters, representing quarterly gains of around ¥2.0 billion. In the third quarter, the Office Services earnings rise exceeded the decline in Office Printing and other areas, enabling RICOH Digital Services to finally generate profit growth. Over the medium term, we will continue to face profit decline pressure in Office Printing and other areas as office printing demand shrinks. We nonetheless aim to minimize this downside impact through such measures as reviewing the sales and services structure while bolstering Office Services earnings by expanding recurring revenues. We seek to get to where Office Services earnings growth consistently outpaces the decline in Office Printing and other areas so RICOH Digital Services can deliver stable earnings growth as swiftly as possible. |
| Operating profit in the third quarter was ¥27.7 billion. How did that compare with your internal target? What were the key business factors in that result? |
| This result was basically on target, with cost controls and favorable forex impacts helping to offset the effects of somewhat weaker business performances. On the business front, mainly RICOH Digital Services underperformed. While it sought to overcome a shortfall in Office Printing hardware, it still fell short of its target, with non-hardware sales remaining weak. Although Office Services sales rose 10% year-on-year in the third quarter, with recurring revenues increasing 16%, sluggish economic conditions in Europe prevented sales from reaching targeted levels. In Japan, however, PC replacement demand and other factors drove steady growth that was slightly higher than projected. |
