[Company analysis] Ricoh (リコー)

「Ricoh (リコー)」manufactures office equipment such as copiers, facsimile machines, laser printers, multi-function machines, and optical equipment such as digital cameras. This company has a wide sales network for the small and middle-sized companies. Overseas sales account for 61% of the total, especially they got large sales in United States. The total number of employees is approximately 92,663.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Ricoh
Company name (Japanese)	リコー
Date of establishment	Thursday, February 6, 1936
Headquarters location	〒143-8555 東京都大田区中馬込一丁目3番6号
Capital	135,300
Consolidated sales	2,013,228
Consolidated operating profit	86,839
Consolidated total assets	2,725,132
Consolidated capital	1,018,988
Capital adequacy ratio	37.4%
Consolidated number of employees	92,663

 

 

 

2. Summary and Features

 
The predecessor of「Ricoh」is「Riken Photographic Paper Co., Ltd.(理研感光紙株式会社)」which was established on February 6, 1936. This company became independent from「Rikagaku Kogyo(理化学興業)」, in order to manufacture and sell diazotype paper that was developed by the「Institute of Physical and Chemical Research(理化学研究所)」. Right after their establishment, from 1937, they started camera business. In 1950, this company established the first mass-produced camera system in Japan, and it became famous for its camera business based on its popularity and cost-efficiency.

In addition,「Ricoh」was engaged in digitalization of copy machines, by releasing the world's top speed office facsimile machine in 1974. Even in the current color copy machine market, the mainstream is「Ricoh」, due to the fact that their market share still No.1 in Japan. As for small multifunction devices and fax machines for offices, they still keep high market share, too. In 2004, this company purchased「Hitachi Printing Solutions, Ltd.(日立プリンティングソリューション)」and make it a subsidiary. By this, they were able to enter the large-scale commercial printer business. In 2007, they purchased the large-scale commercial printer business unit from「IBM」to strengthen their advantages in this field.

However, because of aftershock of the Subprime mortgage crisis, the office equipment market itself has been shrinking. Operating income is also in a slump, and in 2012 it was in the red. 「Ricoh」laid off about 10,000 of employees. By this, their  business performance improved temporarily, but then it began to deteriorate again. Sales are expected to fall further due to the shrinking market size, so management policy of「Ricoh」was switched to pursue operating income rather than sales volume.

Still,「Ricoh」has a high profit system with an average operating profit ratio of over 10% in the office equipment, commercial printing, and heat fields. However, the total dependence on the office equipment field is 70% or more, and the market is expected to shrink. So, they are implementing a diversification strategy to overcome this. The problem is, they expanding their business even into the areas where has very weak sinergies between their existing businesses. In 2012 and 2017, they laid off about 20,000 employees in total, and this must weaken the fighting sprits of their own employees.

By the way,「Ricoh」was engaged in semiconductor industry in the past. The CPU used for that「Nintendo Co., Ltd.(任天堂)」's legendary game console "Famicom" and "SUPER Famicom" was actually made by「Ricoh」. They also made a font "TrueType World". "MS Mincho / MS Gothic" is installed in the Japanese version of Microsoft Windows and this font was produced by one of the subsidiary of this company.

 

 

 

3. Major Business

 

■ Office service field
They provide various office related services such as network infrastructure construction and operation repair.

■ Commercial printing
In the digital package printing / production field, they provide total solutions for home use. The commercial printing market is expected to grow in size going forward, and is considered to be a pillar of Ricoh's growth.

■ Industrial printing
They handle industrial printing related to plastic products, interior products and building materials. Industrial printing is basically a new business, so the current situation is that sales are not very high, but there is a high possibility that the market scale will expand.

■ Thermal field
They handle thermal paper and thermal transfer ribbons such as barcodes and receipts. They have a global top share of 50% for thermal paper and 30% for thermal transfer ribbons. Although the market size itself is increasing, operating income is under pressure due to new entrants from emerging countries.

■ Other fields
Industrial products (stereo cameras, head-up displays, optical modules for projectors, MEMS, etc.), smart vision, and medical fields.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		2,028,899	2,063,363	2,013,228
Consolidated operating profit		33,880	-115,676	86,839
Consolidated total assets		2,759,287	2,641,030	2,725,132
Consolidated net assets		1,116,877	988,755	1,018,988
Breakdown of sales	Office Printing business	1,165,979	1,144,053	1,086,428
	Office Service business	425,612	447,973	481,392
	Commercial Printing business	186,110	185,933	185,292
	Industrial Printing business	11,883	19,200	20,692
	Thermal related business	57,287	61,458	66,368
	Others	182,028	204,746	173,056