Ricoh pushes Structural Overhaul

Originally written and published by HIROMI YAMABATA and RINTARO SHIMOMURA at asia.nikkei.com

Ricoh’s troubles extend beyond massive write-downs

As Ricoh braces for a flood of red ink in the year through March 31 from heavy impairment losses on overseas units, the company maintains that its painful structural reform is succeeding and that next year will bring recovery.

But digitization and stiff competition have the Japanese copier maker’s core business in a bind, and no relief is yet in sight.

asia.nikkei.com reports, the company now projects a record US$1.52 billion (161 billion yen) operating loss — its first in six years — down from a US$300 million (31.8 billion yen) profit the previous year. Just last month, it had forecast an operating profit of US$ 188 million (20 billion yen). It also predicts a net loss of US$ 1.6 billion (169 billion yen), although it previously expected to break even on a net basis.

Ricoh is “taking the matter very seriously,” President and CEO Yoshinori Yamashita told reporters at an emergency press conference Friday.

Of the roughly US$ 1.7 billion (180 billion yen) in impairment losses estimated for this fiscal year, US$ 1.3 billion (138 billion yen) stems from fixed assets including goodwill on Ikon Office Solutions, a U.S. distributor it acquired in 2008 for US$1.63 billion (173 billion yen) in an attempt to develop that market. The purchase seemed promising, but the rise of the internet and other factors caused earnings to stall.

The transition away from paper “exceeded expectations, and competition turned harsh,” said the CEO. “North America faced a striking decline in unit prices.”

Yamashita, appointed in April 2017, has pushed hard for structural overhaul. Under his watch, Ricoh eliminated 5,000 jobs primarily in North America, with further trimming to come, and cut off financial support to a money-losing Indian unit. It also sold its stake in Coca-Cola Bottlers Japan Holdings, a distributor for the soft-drink company with strong ties to Ricoh founder Kiyoshi Ichimura. The impairment loss was positioned as part of the same restructuring effort.