Key Questions and Answers at 121st Ordinary General Meeting of Shareholders

Questions prior to meeting

Question 1:

Social pressure is mounting for CSR initiatives in the supply chain, particularly regarding human rights issues. Tell us about progress with your initiatives and risk reductions.

Respondent:

Yoshinori Yamashita, President and CEO

Answer:

We formulated the Ricoh Group Supplier Code of Conduct in 2006 as part of our supply chain CSR efforts. We revised that code when we joined the Responsible Business Alliance, an industry coalition that fosters CSR in global supply chains. We conduct regular briefings to ensure that suppliers in Japan and overseas understand and comply with our code. There have thus been no human rights violations of that code.

Question 2:

What’s your stance on the growing challenges that your Imaging business faces? What are your business plans and policies? As a shareholder and user of your camera, I sincerely hope that you will maintain and enhance the GR series.

Respondent:

Yoshinori Yamashita

Answer:

Thank you for your devotion to GR series products. Sales of the new GR III have been robust, and the employees involved are going from strength to strength. As demand for digital cameras shrinks, we will keep responding to feedback from enthusiasts and create unique products that match customer needs.

We will continue to reinforce the optical and camera technologies that are pivotal to digital technology because they are vital for creating digital workplaces and for our transformation into a digital services company.

Question 3:

Are you taking the right approach to gender equality? Do you have pathways for women to become senior executives at Ricoh?

Respondent:

Yoshinori Yamashita

Answer:

Our customers are working people, and we believe that we need to be as diverse as customers. We emphasize diversity among executives and employees, and I am leading the way to foster women’s interests.

Only 11.5% of our executives are women. So, last year we joined the 30% Club Japan, which aims to improve the representation of women among corporate executive ranks. I attend the gatherings of that association. I look to increase the percentage of female executives at Ricoh to 18% by 2030.

Question 4:

You are progressing with work practices based on remote work. Are you offering additional support for employees to build remote work environments to motivate more and enhance their productivity?

Respondent:

Yoshinori Yamashita

Answer:

We began making work practice reforms a key management priority in fiscal 2017, and have since improved our programs and tools. Specific initiatives to foster telework environments have included our in-house second job and venture programs.

To become a digital services company, we will need to create environments that are particularly conducive to self-motivated people. We are constantly enhancing programs systems and tools, such as by offering workations. We aim to make our work processes digital and revamp our enterprise systems to make our environments more worker-friendly.

Question 1:

I was surprised at the high quality of your shareholders’ meeting convocation booklet. Couldn’t you reduce the costs of such materials and invest in the future to boost shareholder value? Why did you create such a high-quality publication?

Respondent:

Yoshinori Yamashita

Answer:

Since taking the helm, I have believed that it is important to communicate well with shareholders, institutional investors, and other stakeholders to revitalize internal initiatives. The convocation booklet is an important tool in that context, and we have enhanced the contents to improve transparency.

Respondent:

Hidetaka Matsuishi, Executive Corporate Officer and CFO

Answer:

We consider the convocation booklet one of the most visible documents we provide to shareholders. We enhanced the contents based on feedback from institutional investors and other parties, benchmarking against highly regarded convocation notices at other companies. The booklet admittedly costs some money, but I believe it helps people to learn more about Ricoh and ask questions and provide feedback. We will keep improving the contents based on their input.

Question 2:

Paper copying will likely decline. Have you planned for this, such as by developing hit products to replace copiers?

Respondent:

Yoshinori Yamashita

Answer:

While paper copy volume will decrease, the volume of electronic data will rise. We will accordingly bolster Office Services. Katsunori Nakata will outline devices that should replace MFPs. He heads Ricoh Digital Products, which we tasked to create edge devices that are not necessarily MFPs. This is one of the five business units that we set up recently.

Respondent:

Katsunori Nakata, Senior Corporate Officer

Answer:

The adoption of digital processes will necessarily reduce the use of paper. We will keep supporting the work creativity of customers using digital information. We will thus develop devices that serve as paper-free information input and output interfaces. We aim to launch devices that fully harness audio and video in offices and on the frontlines and at home.

Question 3:

Tell us about the activities of women inside and outside Ricoh and your views on sexual minorities. I was disappointed that your video showed no frontline women presenting their businesses. What proportion of your managers is female?

Respondent:

Yoshinori Yamashita

Answer:

We explained the proportion of female executives in our prior presentation. I’ll ask Mayuko Seto, who oversees human resources, to respond, including in terms of employee and management activities.

Respondent:

Mayuko Seto, Senior Corporate Officer and CHRO

Answer:

We consider it important to address diversity issues, such as advancement for women and sexual minorities. We educate employees through a range of activities and assist employees involved in those initiatives. You rightly pointed out that the video only portrayed men. Still, women are active throughout Ricoh, and we will do more to present that reality in future videos.

Around 30% of our employees worldwide are women, comprising 18% or so in Japan and 36% internationally. Women hold 15.1% of management positions worldwide, the breakdown being 5.8% in Japan and 28% overseas. We joined the 30% Club Japan last year, and look to improve.

Question 4:

Can you be a top runner in Japan if you push forward with initiatives you described on page 82 of the convocation notice to materialize a circular economy?

Respondent:

Yoshinori Yamashita

Answer:

Yes, we want to be a top runner. In October last year, Prime Minister Yoshihide Suga committed Japan to becoming carbon neutral by 2050 and thereafter stated that the nation would endeavor to cut its carbon emissions by 2030 by 46% from 2013 levels.

On the decarbonization front, the Ricoh Group is working to lower its 2030 emissions by 63% from 2015 levels. We mentioned earlier that renewable energy powers the production of all of our A3 copiers. We are exploring the extent to which we can manufacture copiers from recycled materials.

Respondent:

Mikako Suzuki, Corporate Officer

Answer:

Ricoh brought inaugurated Comet Circle in the 1990s. We have done much over the years to materialize a circular economy. Our targets for virgin resources content in our products are 85% or less for fiscal 2022, 60% or less for fiscal 2030, and 12% or less for fiscal 2050. We have also formulated a plastics reduction policy.

Our circular economy stance goes beyond virgin resource inputs to also encompass activities for creating new businesses. For example, we will bolster our eco-friendly product capabilities. Examples include release paper-free thermal label seals, direct printing on plastic bottles, and ongoing work on products and parts recycling.

Question 5:

Your efforts to resolve social issues through new businesses seem very promising. When will you launch the energy harvesting products that you presented earlier?

Respondent:

Yoshinori Yamashita

Answer:

Our partners have already released mice and desks incorporating fully solid-state dye-sensitized solar cells. In May this year, we launched a new fully solid-state dye-sensitized solar cell product offering 20% better output performance. We will keep collaborating with partners to propose the use of these cells in various devices.

Question 6:

I assume that some teleworking demand will continue after the COVID-19 pandemic abates. What’s your strategy for providing products and services that cater to that demand?

Respondent:

Yoshinori Yamashita

Answer:

For the time being, we anticipate approaches that combine working remotely and in the office. We don’t expect things to go back to how they were or that all work will be remote. We consider it important to remain close to customers to resolve worker issues. We will therefore deploy internal practices and deliver the expertise we amass in the process to them.

Question 7:

To what extent have you filled your quota for employing people with disabilities? What work environments have you created for such individuals?

Respondent:

Yoshinori Yamashita

Answer:

We have naturally reached the mandatory employment rate for people with disabilities. We also set up a company that organizes tasks that these people find easy to perform. That said, we still need to do more to create office and plant environments that are conducive to all, regardless of disabilities. We aim to ensure that people with disabilities can also find fulfillment through work and look to take the lead in that respect.

Question 8:

You announced that you would repurchase ¥100 billion in shares. What internal discussions and backdrop led to this decision?

Respondent:

Hidetaka Matsuishi

Answer:

The revision of the Corporate Governance Code in 2018 mandated managements to focus on returns on capital. We explored specific measures in that respect and outlined our capital policy on IR Day in April 2019. The Board of Directors and other bodies subsequently examined details, including to optimize our capital structure and shareholder returns. We originally planned to make an announcement in March 2020 but had to postpone that in view of the uncertain economic environment during the pandemic.

Two factors prompted share repurchases. First, partially transferring shares in consolidated subsidiary Ricoh Leasing to Mizuho Leasing in 2020 left us virtually debt-free. That was great, but there were also concerns that corporate operations prioritized capital too much. Second, we had targeted ¥200 billion in acquisitions under the 19th Mid-Term Management Plan but invested only ¥40 billion of so in such purchases, so we had more than ¥100 billion left over.

So, we decided to return ¥100 billion to shareholders under the 19th Mid-Term Management Plan. In March 2021, when the pandemic’s impact became clearer, we announced a detailed capital policy and share repurchase program and started buying back shares. As of the end of May this year, we had completed 25.9% of repurchases, so things are progressing. We expect to finish up the program within a year as planned.

Question 9:

What post-pandemic production site strategies are you considering? What are you doing already, and what are your plans?

Respondent:

Yoshinori Yamashita

Answer:

We adopted a business unit structure in April this year. This setup makes each business responsible for its planning, development, production, and sales and service. Each unit has its own production sites and pursues improvements and reforms. We used to have a production headquarters, but each business now looks after its own manufacturing. At the same time, all business understand the effectiveness of sharing production technology with each other. Since the Digital Products business unit concentrates on manufacturing, we look for a considerable portion of its production to be at our sites in China, Thailand, and Japan.

Respondent:

Katsunori Nakata

Answer:

Each product business began running its own plants under the new business unit setup. To date, many of our plants around the world have manufactured the component modules of individual products based on regional and technology considerations. Our approach was very inefficient in working capital terms from the standpoints of parts collection and in-process inventories. We accordingly decided to reorganize and consolidate plants. We accorded top priority to making each plant a leader in its category. This approach will also accelerate processes and strengthen our production structure.

Also, In addition, making back office operations digital enabled us to launch a key new plant in China during the pandemic with remote support from Japan. We believe that establishing such digital manufacturing technology and deploying it at factories for each business unit will enable us to increase overhead efficiency much more than rivals. We will continue to strengthen plants for each business.

Question 10:

What are the goals and benefits of your business unit structure?

Respondent:

Yoshinori Yamashita

Answer:

Having each business unit handle its own planning, development, manufacturing, and sales and services should make management more nimble. Having created business units for each customer area, we look to accelerate our frontlines focus. At the same time, I want to keep headquarters as small as possible and concentrate on groupwide portfolio management, allocating resources strictly as needed.

We will have all business units grow faster and monitor them strictly through portfolio management. I believe that we will thus maintain healthy checks and balances within Ricoh.

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