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The company also announced its medium and long-term expectations.
Ricoh executives, including President Yoshinori Yamashita, held a briefing for analysts on March 3, 2022, to share progress on their medium and long-term outlook formulated and announced a year ago, as well as the progress on the 20th Mid-Term Management Plan (FY 2021 to FY 2022).
In this mid-term management plan, Ricoh focuses on the growth of its digital services business, which addresses problems faced by workers in three workplaces—in the office, in the field, and in society. The core of digital services business is office services. This business also includes MFPs that function as edge devices connected to the Ricoh Smart Integration platform for in-office printing and field digitalization, including commercial products and industrial printing. “We have set a target to raise [the digital services sales ratio] from 39% in FY 2021 to over 60% in FY 2025,” said Yamashita.
Ricoh has set an operating profit target of +27 billion yen (a decrease from FY 2020 to FY 2022) in the office services business that supports the digital services business. While there was no change in the overall target, the breakdown of the target values by region has been revised. The target values have changed from +14 billion yen to +10 billion yen for Japan and +6 billion yen to +10 billion yen for Europe. There was no change for other regions, which remained at +7 billion yen.
The Japanese market has been affected by the recent semiconductor shortage. The office services business in Japan includes Scrum Package, which encompasses PCs, servers, and network equipment. Scrum Package has been directly impacted by the semiconductor shortage. The high value-added packages for industries that Ricoh is currently focusing on—construction, healthcare, and manufacturing—are strong this year. Because semiconductor shortages are expected to remain for much of 2022, the target of Ricoh’s mid-term management plan has been revised downward in the Japanese market.
Ricoh’s Scrum Asset, the services for midsized companies to build individual systems for each customer by system engineers, has been relatively insulated from the semiconductor shortage as it can be dealt with by using available information and communication technology (ICT) products, particularly those that offer security and access to the cloud. The price and gross profit per customer are much higher than those of Scrum Package. In FY 2022, the company plans to implement measures that focus more on mid-sized companies. The 2022 target for Scrum Asset sales has been revised upward from 35 billion yen to 45 billion yen.
In Europe, the acquisitions of ICT companies such as DocuWare and Axon Ivy, as well as the development of office services businesses at sales companies, are strong, contributing to the upward revision of the target. Although the companies acquired in the past have been slightly affected by the semiconductor shortage, their sales have grown steadily at 117% year-over-year. European sales companies are steadily expanding their office service packaging business through the WTA (Work Together Anywhere) campaign. In Europe, the company is moving ahead with the shift of personnel from the office printing business to the office services business. As a result, operating income was projected to increase by 7 billion yen in Europe by the end of FY 2021. This exceeded the initial target of +6 billion yen for FY 2022. In Europe, synergies after the acquisitions are accelerating, and business expansion is very strong, so the company has revised the operating income target for the end of 2022 upward to +10 billion yen.
In North America, BPO (Business Process Optimization) business occupied a large part of the service business and was greatly affected by COVID-19. Because of this, in this mid-term management plan, the company is aiming for a profit increase of 500 million yen from FY 2020 to FY 2022, replacing the service portfolio and concentrating its investment on improving the value for managed services customers. In the operating profit target of office services business, North America is included in other regions. Ricoh also reported strong sales growth for DocuWare, which Ricoh acquired in 2019, with 149% growth year-over-year projected for FY 2021.
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