Key Questions and Answers
Questions during the meeting
Question 1
I think you should appoint more female directors.
Respondent
Akira Oyama, President and CEO
Answer
We respect the diversity of the Board of Directors. We strive for a board composition that provides diversity of skills and gender. We will continue to pursue diversity in light of changing circumstances.
Question 2
I'm concerned about Ricoh's equity ratio. It was previously very low and is now at 45%. Given that Ricoh has been in operation since the creation of Riken Kankoshi, I would like to see the ratio reach 50%. Have you set a target for this? I want Ricoh to improve its equity ratio as much as possible and embark on acquisitions. Please share your target with us.
Respondent
Takashi Kawaguchi, Director, Executive Corporate Officer and CFO
Answer
We do not have a specific equity ratio target. Under the 21st Mid-Term Management Strategy, we seek optimal net assets of around ¥1 trillion, or ¥900 billion after foreign exchange adjustments. We maintain a policy of using debt in mature businesses and allocating equity capital to growth businesses, aiming to strike a balance. We are fully aware of the need for a robust capital structure to secure good ratings and raise funds. The management team will continue to monitor the equity ratio and optimize the capital structure from various perspectives.
Question 3
What are Ricoh's sales in India in view of its rapid economic growth?
Respondent
Akira Oyama, President and CEO
Answer
While we do not disclose sales figures for India, I can confirm that sales there are not significant. However, given the nation's fast economic development, we will continue to deploy timely and appropriate measures in view of conditions in that market.
Question 4
Ricoh is well-known for its MFPs, but that business is declining. While I believe transitioning to digital services is the optimal strategy, it is challenging to ascertain the extent to which MFPs contribute to overall revenue. What percentage of sales do you derive from MFPs?
Respondent
Akira Oyama, President and CEO
Answer
MFPs represent a vital gateway to digital services. We plan to reinforce that business further, including through the joint venture we will establish with Toshiba Tec. MFPs account for approximately 40% of external sales.
Question 5
Did Agenda Item 4 cover internal directors other than Yoshinori Yamashita, yourself, and Takashi Kawaguchi?
Respondent
Akira Oyama, President and CEO
Answer
It also covered Seiji Sakata, who had been an internal director until the 123rd Ordinary General Meeting of Shareholders in June 2023.
Question 6
You mentioned ETRIA Co., Ltd., which you will launch on July 1. Please explain how it will help you achieve your targeted 60% digital services sales ratio by fiscal 2025.
Respondent
Akira Oyama, President and CEO
Answer
Devices like MFPs are essential components of digital services. ETRIA will play a significant role in this regard by developing a more robust engine to expand our customer base and connect customers to our digital services.
Question 7
Why is the sale of RICOH Industrial Solutions' optical business encountered a delay? Can you update the current situation and the outlook for this sale?
Respondent
Akira Oyama, President and CEO
Answer
As previously stated in our press release, the postponement is due to procedural considerations. The impact on performance will be minimal. That business manufactures such offerings as automotive stereo cameras and projector units.
Question 8
Please provide an overview of Ricoh's rugby operations for the 2023/2024 season? Can you fill us in on the direction and progress of commercialization efforts? Also, given that the season included regulation games, I would like to hear about the strategy to bolster the team and achieve a top-four finish or win the championship next season.
Respondent
Yoshinori Yamashita, Representative Director and Chairperson
Answer
Financial results for the rugby unit are not disclosed as it is part of Ricoh. Currently, only two of the 12 teams in Japan Rugby League One Division 1 have become commercial entities. While the league aims to become a professional entity, a decision has yet to be made regarding the commercialization our rugby unit. Please note that preparations are underway, including in terms of governance, to facilitate such a transition. This year, we are focusing on developing young talent and making the team more competitive. We anticipate that these efforts will result in improved performance, and we appreciate your support when the league season begins again in early December.
Question 9
Please provide an overview of Ricoh's risk management strategy in overseas production sites, particularly in light of global instability?
Respondent
Katsunori Nakata, Executive Corporate Officer
Answer
We mitigate geopolitical risks by producing our main product, toner, in multiple countries. That said, we source some key components for core products from specific countries. We will soon finalize a structure to procure parts without relying on any single country. Furthermore, we will effectively leverage the new plant at ETRIA, which we will establish on July 1, to enhance our risk management efforts.
Respondent
Akira Oyama, President and CEO
Answer
We are aware of the importance of overseas risk management and will continue to prioritize this area.
Question 10
I'm a little concerned that the president doesn't have a background in governance and risk management.
Respondent
Akira Oyama, President and CEO
Answer
From a governance and risk management perspective, my extensive international experience in the field, spanning over two decades, equips me with the ability to address a diverse range of business and operational challenges from multiple perspectives. I believe that I possess the requisite leadership skills as the CEO.
Question 11
I appreciate your approach to reduce human capital costs to maintain profitability. Could you please provide more details on specific measures you have implemented in this regard? Also, you mentioned that you will pare down development investments, although investments remain necessary. How will you steer the company to achieve a return on equity of 9%?
Respondent
Akira Oyama, President and CEO
Answer
We recognize the importance of delivering appropriate returns on the funds that shareholders entrust to us. We will strategically select and focus investments to ensure returns. Success rarely comes from broad and shallow investment approaches, so we will concentrate development investments in areas that offer high returns and align closely with our business.
The development approach for the digital services we are reinforcing often differs significantly from the traditional approach for MFPs. While we have cultivated key technologies in-house for MFPs over the years, digital services necessitate integrating a range of internal and external technologies. To streamline R&D expenditure, we are drawing open innovation and alliances in development.
We aim to enhance companywide efficiency increase productivity per employee. This means investing more in self-driven individuals. When such employees align with our corporate goals and deliver results, they add value to our productivity. In turn, employees find fulfillment in contributing value, which motivates them to grow further. The company invests in this growth, creating a virtuous cycle.
Therefore, I believe it is essential to invest in this cycle and manage it successfully. We aim to attain a return on equity of 9% through a comprehensive strategy that includes human capital and R&D.
Question 12
How enthusiastic are you about the joint venture with Toshiba Tec?
Respondent
Akira Oyama, President and CEO
Answer
We view the joint venture with Toshiba Tec as a crucial step in enhancing the capabilities of our devices. I will ask Katsunori Nakata, who will serve as the president of the joint venture, to provide an overview of our interest in and vision for the partnership.
Respondent
Katsunori Nakata, Executive Corporate Officer
Answer
From when we establish the joint venture on July 1, we will streamline development and production units and integrate service parts and procurement to reduce costs. These efforts will be vital to succeed in a challenging MFP market. We have been preparing to create this joint venture for several years. We aim to accomplish our goals as swiftly as possible and become a leader in our field. The common engine that we will develop will be marketed under both the Toshiba Tec and Ricoh brands. While the market is down slightly due to the shift towards paperless solutions, team members joining ETRIA from both companies are very enthusiastic as the opportunity to create new value. We are delighted to use this to significantly grow the business and help Ricoh succeed.
Question 13
Are Ricoh's shogi (Japanese chess) and golf tournament sponsorships contributing to earnings? If so, shouldn't you look into offering additional title sponsorships? Personally, I get great joy from seeing Ricoh's name on TV.
Respondent
Akira Oyama, President and CEO
Answer
Our title sponsorships in areas such as shogi and golf offer excellent promotional value. These events capture the interest of customers, particularly those involved in business decision-making. While we do not currently plan new title sponsorships, we will consider them flexibly, assessing their cost-effectiveness as we move forward.
Question 14
Securing talent is a key priority for a digital services company. Could you please share specifics on salary increases, inflation, and telecommuting allowances??
Respondent
Ryoko Nagahisa, Corporate Officer and CHRO
Answer
In April this year, we increased salaries by 3.6%, including a base raise. This boost was greater than last year. We included an allowance for inflation in this increase. We determine salary raises through a committee of employee representatives, with management finalizing decisions. This process ensures that we remain competitive and motivate employees, and we believe we have secured the right wage levels. Regarding telecommuting allowances, we maintain a hybrid work model without fixed locations, so we do not provide allowances specifically for telecommuting.
Respondent
Akira Oyama, President and CEO
Answer
As a digital services company, we recognize the importance of encouraging people to acquire new skills.
Question 15
While I understand the principles you present in your business report, I would like to know if overseas expansion offers growth potential.
Respondent
Takahiro Irisa, Senior Corporate Officer
Answer
In 2020, Ricoh made a commitment to transforming into a digital services company. This does not mean transitioning into completely new businesses. Instead, it involves leveraging the power of digital technologies to deepen relationships with our 1.4 million customers worldwide who use more than 4 million MFPs. We have already received requests from customers around the world to help them transform their workplaces. For instance, we are streamlining work processes through automation and providing meeting spaces that foster employee creativity. We seek to grow by building on the relationships with our customers we have cultivated over the years and addressing their challenges.
Respondent
Akira Oyama, President and CEO
Answer
Our global customer base and our ability to serve customers worldwide provide us with a competitive advantage. We will continue to reinforce our international presence and global reach.
Question 16
There have been news reports recently about large companies relocating their headquarters to major business locations. Does Ricoh plan such a move?
Respondent
Akira Oyama, President and CEO
Answer
Companies adopt their own strategies for deciding where to locate their headquarters, and we recognize the advantages of situating headquarters near major business hubs. While we do not currently intend to relocate our headquarters, we will continue exploring the most effective ways for managing our global organization.
Question 17
Please tell us what you learned in your first year as CEO and share your goals with us.
Respondent
Akira Oyama, President and CEO
Answer
This past year saw the launch of the Corporate Value Improvement Project, which involved seeking and learning from the views of shareholders, analysts, and other external stakeholders. This fiscal year, we are committed to firmly execute that project and meet the expectations of our diverse stakeholders.