Ricoh posted an operating loss of ¥45.4 billion for the year ended March 31, 2021, down ¥124.4bn from the previous year’s profit of ¥79bn. But the global print technology company says the recovery is underway and predicts a return to a profit of ¥50bn in the current financial year.
 |
| Ricoh billboard in Sydney, NSW |
In its annual reporting statement, Ricoh said the operating loss of ¥45.4 billion “reflected the significant business impact of the pandemic and offset better than anticipated gains from measures to respond to the crisis and to gear up for the future. After excluding special factors such as restructuring, production reorganization costs, impairment losses and government grants, the effective operating loss for fiscal 2020 was ¥10.8 billion. This figure represented a turnaround from an operating loss of ¥31.5 billion in the first half of the year to an operating profit of ¥20.7 billion in the second half on a recovery from the pandemic and efforts to reinforce the business corporate structure and expand in the Office Service area.”
* Overview of the Year of Fiscal 2020 (April 1, 2020 – March 31, 2021)
Business Environment
The COVID-19 pandemic hampered the global economy of fiscal 2020.
In the Ricoh’s mainstay office equipment market, demand declined significantly amid government-imposed lockdowns, regulatory and other constraints on economic activity. Prolonged U.S.-China trade frictions and geopolitical risks in various regions added to uncertainty about the future. Port strikes in the Americas and a ship stranding in the Suez Canal increased global supply chain risks.
It was against this economic backdrop that the pandemic affected the Ricoh’s mainstay office equipment businesses, including MFPs, throughout the year, significantly reducing demand in advanced and developing nations. Notwithstanding signs of a recovery in the third quarter, new infection waves caused corporate demand for consumables to dwindle.
At the same time, teleworking and new work practices became well established in offices, educational institutes and other settings. Ricoh will accordingly continue to support the ever-changing world of work among customers by assisting with digital transformations, for which demand is surging in office and other workplaces.
Consolidated sales for fiscal 2020 decreased 16.3% from a year earlier, to ¥1,682.0 billion. In the Office Printing, hardware sales were down owing to lockdowns and other constraints that hampered sales activities. Non-hardware sales also dropped amid declining office attendance rates among customers, primarily in Europe and the Americas. Those effects peaked in April and May 2020, leading to a gradual recovery from June. Consolidated subsidiary Ricoh Leasing Co., Ltd. (hereinafter, Ricoh Leasing) became an equity method affiliate after the transfer of shares, fueling a sales drop.
Ricoh accordingly posted an operating loss of ¥45.4 billion, down ¥124.4 billion from a year earlier.
Review by Business Segment
Commercial Printing
We expect this market to grow on the strength of the high image quality and productivity and broad paper support of our offerings and a rising need for systems that can deliver high-value-added printed materials that open doors to new opportunities. Another driver is market potential from the pandemic increasing the need for digital output that flexibly matches demand fluctuations. We aim to expand our business by catering to the needs of customers while helping them to develop their operations.
In May 2020, we launched the RICOH Pro C5310S/C5300S colour production for commercial printing customers. In January 2021, we brought out the RICOH Pro VC40000 high-speed inkjet printing system for transaction market customers. The RICOH Pro C5310S/C5300S enables the efficient production of diverse printed materials, broadening horizons for print-on-demand businesses in the printing sector. The RICOH Pro VC40000 has enhanced productivity, paper handling, and the system configuration flexibility needed for transaction printing. Commercial Printing sales fell 24.5%, to ¥134.6 billion. This was due largely to declining hardware sales in the Europe and the Americas markets, which suffered from business deal postponements owing to sales activity restrictions and from lower customer investment appetites because of the pandemic. Another downside factor was reduced commercial print volumes owing to declining business activity. From the second quarter, sales of consumables and other offerings gradually recovered on an upturn in print demand for customer events and resumptions of business activities. The operating loss was ¥14.6 billion, down from ¥21.6 billion a year earlier. This loss reflected gross profit downturn from lower sales of transaction printer-related consumables and other products and an impairment loss on development and other fixed assets. After excluding the impairment loss, operating profit would have been ¥11.8 billion.
Industrial Printing
We aim in this segment to capture new markets and customers based on our strong position in inkjet heads that offer superior durability and are compatible with an array of inks. Digitalizing industrial printing through inkjet processes should greatly lower the environmental impact of analogue textile printing, which has been an issue in the textiles industry, owing to wastewater pollution and inventory destruction from overproduction.
In fiscal 2020, we endeavoured to expand sales of inkjet printheads launched in the previous term. In March 2021, we launched two new models for the sign and display market and augmented our industrial printer range to expand our business.
One new offering was the RICOH Pro TF6251, a large-format flatbed printer employing photo-curable ink that broadens the potential of inkjet printing to encompass building materials, furniture, and other interior design where original design is essential.
We also introduced the RICOH Pro L5160e/L5130e, a large- format inkjet printer that can use latex ink. This model is for products and services that meet the high-mix, low-volume, quick delivery needs of the indoor and outdoor signage display and wallpaper markets.
Industrial Printing sales increased 7.3%, to ¥24.6 billion. Sales of inkjet printheads to customers in the Europe and the Americas were down owing to the pandemic. Offsetting that impact were a recovery in sales of inkjet printheads in the key Chinese market and higher U.S. sales of industrial printers.
We incurred an operating loss of ¥1.6 billion for the year because of increased product development spending to drive business growth. The profit improved by ¥3.7 billion from the previous term, reflecting a return to profitability in the fourth quarter.
Office Printing
In Office Printing, we shifted focus from sales to profitability from fiscal 2017. We have endeavoured to bolster earnings by creating new value while optimizing our business structure.
In the year under review, management took a range of steps in view of the operating climate likely remaining adverse owing to the pandemic. These efforts included reviewing development themes, reinforcing digital manufacturing, notably by optimizing production sites, and streamlining the value chain by enhancing productivity in sales and services operations. In particular, we have significantly reduced downtimes. We launched new offerings in the RICOH IM series of fast, advanced digital MFPs that improve services efficiency by significantly reducing downtimes. In May 2020, we rolled out RICOH IM C8000/C6500 full-colour models. In January 2021, we brought out the monochrome RICOH IM 9000/8000/7000, basically rounding out key offerings in our advanced MFP lineup. We will further improve service efficiency by boosting machine in field numbers.
We source all of the electricity we consume in manufacturing these new models from renewables, enabling us to expand our business while shrinking our environmental footprint. We are creating new customer value by packaging MFPs with applications and cloud services that cater to specific industries and operations.
Office Printing sales were down 19.5%, to ¥815.8 billion in fiscal 2020. Sales of hardware and related consumables were off owing to the pandemic, with lockdowns and other restrictions causing sales and deliveries to slump, while print volumes were down amid declining office attendance rates, particularly in Europe and the Americas. Operating profit plunged from ¥82.5 billion a year earlier, to ¥6.7 billion. This was despite progress in streamlining operations to lower costs. Key downside factors were a drop in gross profit from reduced sales and expenditure on measures to permanently reinforce the corporate structure. Another factor was the absence of one-time gains posted in the previous year. We were profitable for the year after experiencing a loss in the first half amid plunging sales and gradually recovering in the second half.
Office Service
In Office Service, we pursue business growth by providing digital services resolving a range of customer business issues, such as solutions for work practice reforms that leverage our global customer base.
In Japan, we expanded sales of packaged solutions during the term that integrate IT equipment, software, and services to digitize workflows, including for telework, for customer industries and businesses. The focus was on small and medium-sized businesses. In Europe, we acquired five information and communications technology firms to strengthen and expand our IT services sales and units in priority countries. We started full-fledged sales of solutions packages, mainly for telework, driving a significant sales increase. We also greatly boosted sales of document workflow management applications from DocuWare GmbH, which we acquired in the previous term. In North America, we progressed in digitizing business processes, partially offsetting the impact of lower core business process outsourcing sales owing to customer site closures as a result of the pandemic.
Office Service sales decreased 4.5%, to ¥532.3 billion. Although sales were up for IT services and applications, including packaged solutions, sales were down for IT hardware in the absence of the previous year’s demand associated with transitions to Windows 10. Operating profit was ¥35.4 billion, from ¥32.6 billion a year earlier. This stemmed from progress in improving profitability by expanding sales of solutions packages. The operating margin rose from 5.9%, to 6.7%, as we progressed steadily in transforming from primarily an office equipment manufacturer into a digital services company.
Thermal Media
Demand has risen solidly in this area on growth in e-commerce, which has driven demand expansion worldwide for shipping labels. It is against this backdrop that we have drawn on the materials technologies that we amassed over the years to steadily expand our business, notably by supplying thermal paper, ribbons, and other products that ensure outstanding resistance to heat and abrasion resistance and deliver superior print definition and storage capabilities. We have also endeavoured to broaden new value through such offerings as our proprietary rewritable contactless laser system.
Full reports here.
https://www.ricoh.com/-/Media/Ricoh/Sites/com/IR/data/pre/pdf/r02q4_1.pdf
