RICOH imagine.change.Global

FY2006 Interim Financial Announcement

ended September 30, 2005
Date : October 28, 2005
Time : 10:00am-11:30am
Place : TSE Hall
Contents : Mr. Zenji Miura, CFO of Ricoh Company, Ltd., explained FY2006 Interim results using materials below.
Summary of 3rd Quarter Results Presentation
Q&A Session



< Attention >
These contents are prepared for the convenience of investors who could not participate in the financial results meeting. The contents below are by way of a summary and are not word for word account. Additionally, the Company bases the estimates in this material on information currently available to management, which involves risks and uncertainties that could cause actual results to differ materially from those projected.

  HTML PDF Download
Presentation Materials Financial Highlights /Appendix
 
 

 

Summary of Interim Results Presentation

The consolidated sales and profit of Ricoh Group increased year-on-year in the 1st half of the fiscal year ending March 2006 due to the steady growth of office solution business especially sales increase of color machines, MFPs and printers both in Japan and overseas.
We also raised the sales forecast of the fiscal year ending March 2006. We expect the office solution business to continue to grow in the 2nd half. However we continue to spend for the integration and reorganization of bases in line with our 15th mid-term plan growth strategy. We therefore did not change the forecast for operating income, pre-tax profit and net income. For the third quarter and onward, we predict an exchange rate of 110.00 yen against the U.S. dollar and of 135.00 yen against the Euro.
We decided to raise the half-year dividend to 12 yen per share. And we forecast a raise in dividend for the fiscal 2006 to 24 yen per share.


Q&A Session

Q1.

Q2.

In the first quarter, approximately 3 billion yen expense was front-loaded for integration and reorganization of bases. Was there any such front-loaded expense in the second quarter?

Q3.

Which region experienced lower profits than expected?

Q4.

The profit forecast for the fiscal year ending March 2006 hasn't been changed in spite of forex effect and expense decrease. Does this mean business condition is still severe? If so, why haven't you revised the forecast downward?

Q5.

You seem not to reap the expected profit from the present weak yen. On the other hand, do you lose profits as a result of the strong yen?

Q6.

On the forecast of fiscal year ending March 2006, the latest forecast of expense increase excluding forex impact and R&D came to 21.4 billion yen. It has been changed to 17.5 billion yen this time. What's the reasoning behind this?

Q7.

Expense of first half has increased compared to the forecast of the beginning of the fiscal year. So, you need to reduce the expense of the second half despite some front-loaded expenses from the first half. How will you achieve this reduction?

Q8.

According to the forecast, SG&A ratio will decrease in the fourth quarter. Will SG&A ratio continue to decrease into the next fiscal year?

Q9.

Inventories have increased in the first half compared to the end of March 2005. Will you manage to decrease them in the near future?

Q10.

Why has the forecast of gross profit rate increased?

Q11.

How much do you forecast net cash by operating activities for the fiscal year ending March 2006?

Q12.

What is your forecast for the semiconductor business?

Q13.

How do you expand the high-end printing business that many competitors have been entered in these days?

Q14.

How do you see recent changes in the copier market?

Q15.

How do you respond to the changing copier market? Do you think that Ricoh can recover the profitability of a few years ago?


 
Q1. Why was the sales growth rate lower than expected in Europe and higher than expected in the Americas?

A1. In Europe, the cause was a tough business environment due to hard competition. In the Americas, we have continued to be strong as a result of our sales promotion strategies, the impact of new products and recovering business conditions in Central America and Canada.

 
Q2. In the first quarter, approximately 3 billion yen expense was front-loaded for integration and reorganization of bases. Was there any such front-loaded expense in the second quarter?

A2. No. There was no front-loaded expense in the second quarter.

 
Q3. Which region experienced lower profits than expected?

A3. Europe and Japan. The Americas held steady.

 
Q4. The profit forecast for the fiscal year ending March 2006 hasn't been changed in spite of forex effect and expense decrease. Does this mean business condition is still severe? If so, why haven't you revised the forecast downward?

A4. We are sticking to our initial targets. It won't be easy but we haven't changed the forecast.

 
Q5. You seem not to reap the expected profit from the present weak yen. On the other hand, do you lose profits as a result of the strong yen?

A5. Yes, the strong yen has an effect on our profits but we are able to cover the risk partially by decentralizing of production sites.

 
Q6. On the forecast of fiscal year ending March 2006, the latest forecast of expense increase excluding forex impact and R&D came to 21.4 billion yen. It has been changed to 17.5 billion yen this time. What's the reasoning behind this?

A6. Expense increase was forecasted in this fiscal year for the growth strategy of the 15th mid-term plan. However, we are trying to minimize the expenditure for each program. This is the reason for the lower forecast.

   Page Top
 
Q7. Expense of first half has increased compared to the forecast of the beginning of the fiscal year. So, you need to reduce the expense of the second half despite some front-loaded expenses from the first half. How will you achieve this reduction?

A7. We expect to benefit from the effect of investment in efficiency such as system integration.

 
Q8. According to the forecast, SG&A ratio will decrease in the fourth quarter. Will SG&A ratio continue to decrease into the next fiscal year?

A8. Yes, we forecast SG&A ratio decrease into the next fiscal year.

 
Q9. Inventories have increased in the first half compared to the end of March 2005. Will you manage to decrease them in the near future?

A9. Inventory turnover is improving, and preparation of new products release was one of the reasons for the inventories increase. So this is not a serious problem for us. We are eager to decrease inventories with even more intensive risk control than before.

 
Q10. Why has the forecast of gross profit rate increased?

A10. Because of forex effect and new product mix improvements.

 
Q11. How much do you forecast net cash by operating activities for the fiscal year ending March 2006?

A11. We don't disclose this figure but expect it to rise year on year.

 
Q12. What is your forecast for the semiconductor business?

A12. We have not changed our forecast for the semiconductor business: at 36.0 billion yen for sales and break even for profit.

 
Q13. How do you expand the high-end printing business that many competitors have been entered in these days?

A13. We are expanding business for the downsizing of mainframe printing and print-on-demand with Ricoh Printing Systems Ltd. We have also launched new high-speed color products. Thus we continue to expand the business gradually.

 
Q14. How do you see recent changes in the copier market?

A14. The trend toward multifunction and colorization is getting bigger than before, and will continue for the next few years. Ordinary type products still exist in the market. Meanwhile the competition is heating up in several segments and regions.

 
Q15. How do you respond to the changing copier market? Do you think that Ricoh can recover the profitability of a few years ago?

A15. We intend to increase our profits by expanding the solutions business to meet customer demand and offering one-stop-service. Since we have invested in R&D and human resources for that purpose, we believe that we can increase our profitability going forward.

Back to IR Presentations

Page Top