Ricoh CEO Akira Oyama explains the status of the project.
Above: Ricoh President and CEO Akira Oyama.
On February 6, Ricoh’s President and CEO, Akira Oyama, conducted a “Progress Report on the Corporate Value Enhancement Project” after the company’s third-quarter earnings announcement, aiming for the fiscal year 2025.
Targeting a transformation into a digital services company by fiscal year 2025, Ricoh expects to reduce R&D expenses by approximately 30 billion yen through “R&D optimization.” The company has consolidated its focus on 10 selected businesses, indicating progress in its strategy of “selecting and concentrating” on core areas.
In the “Structural Reform of the Office Printing Business,” it was decided that the joint venture establishment agreed with Toshiba Tec in May last year would begin on July 1, 2024. The new company, ETRIA, will manufacture digital multifunction devices with a common engine equipped with each company’s respective controllers. Both companies can sell them as their own unique digital multifunction devices, so there is no change in the competitive environment other than a mutual reduction in manufacturing costs.
Ricoh plans to finalize its targets for fiscal year 2024 and report on the progress of the Corporate Value Enhancement Project at the time of its full-year earnings announcement in May. This update precedes that announcement, providing current information about what can be discussed.
The company’s mid-term management plan through fiscal year 2025 seeks to transition into a digital services company. In “R&D Optimization,” R&D expenses are being concentrated in the workplace area, and progress is proceeding smoothly. By working backward from the desired business structure, themes are selected and focused on areas close to digital services to align with the proper level. As a result, R&D expenses will be reduced by approximately 30 billion yen.
Regarding “Selection and Concentration of Businesses,” the internal review of the targeted 10 businesses has been completed. President Oyama’s thoughts on various options, such as strategic shifts, convergence of businesses, and sale to the best owner, are taking shape. However, as a little more time is needed before announcing specific actions for each business, it was announced that progress is steadily being made.
Within the “Structural Reform of the Office Printing Business,” regarding the joint venture with Toshiba Tec, both companies announced the absorption-type split agreement on the same day. The investment ratio for ETRIA Co., Ltd. will be 85% for Ricoh and 15% for Toshiba Tec. “By pooling both companies’ technologies and consistently handling the development and production of devices centered around multifunction devices, we will create competitive engines,” said Oyama.
Oyama added, “While launching competitive engines in terms of product performance and cost, differentiation will be made for each other’s sales channels through software and other means, and products under both companies’ brands will be offered. There are synergies in terms of technology, quality, cost, and various other aspects, and this will enable differentiation in each company’s sales.”
He added, “It’s challenging to differentiate while seeking scale advantages, but with this joint venture, we believe it’s a very attractive model that allows for differentiation while also taking advantage of scale benefits. We hope it will be utilized by many other brands who might be interested in it.”
Additionally, regarding the Acceleration of Office Services Profit Growth, Oyama reported that the office services business, which is aiming for further growth, has experienced a 17% increase in stock sales compared to the previous year.
“The stock sales from these office services grow steadily by having our customers use our various services and continue to use them because they like them. This increases the revenue per customer and the stock sales, creating a model for stable growth.”
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