FAQ for FY2024 Q4 Financial Announcement
Last Update: June 2, 2025
| You projected Corporate Value Improvement Project costs of ¥33 billion, but they were actually ¥29.7 billion in fiscal 2024. Does that mean that expected savings will also be lower? Will you carry over the unused spending to fiscal 2025? |
| The cost difference was primarily because spending on the Second Career Support Program in Japan came to ¥12.8 billion, against a projected ¥16 billion. The Corporate Value Improvement Project should still generate savings as planned. The ¥3 billion in reduced spending will not carry over into fiscal 2025. |
| To which segments have you allocated fiscal 2024 costs for the Corporate Value Improvement Project? |
| Corporate Value Improvement Project costs were ¥29.7 billion in fiscal 2024. We posted ¥10.4 billion to RICOH Digital Services for reviewing our sales and service structures, ¥1.3 billion to RICOH Digital Products for the ETRIA development and production joint venture as part of the transformation of Office Printing business structure, and ¥12.8 billion to Eliminations and corporate for our Second Career Support Program in Japan. We allocated the remaining ¥5.2 billion across multiple segments for accelerating business selection and concentration and to other initiatives. |
| What were your estimated savings from the Corporate Value Improvement Project in fiscal 2024? What segments did you record them under? |
| Corporate Value Improvement Project savings were ¥20.6 billion in fiscal 2024. We posted ¥14.3 billion in savings to RICOH Digital Services for reviewing our sales and service structures. Another ¥2.8 billion went to RICOH Digital Products for ETRIA as part of Office Printing business structural reforms. We distributed the remaining ¥3.5 billion in savings across multiple segments linked to relevant businesses from such initiatives as optimizing R&D and supply chain management. |
| Even after excluding foreign exchange impacts, one-time charges, and tariff impacts, you project ¥110 billion in operating profit for fiscal 2025. This is well below the ¥130 billion target of your 21st Mid-Term Management Strategy. You aimed to reach that goal from Corporate Value Improvement Project savings and business growth. What caused that shortfall? |
| There are two main factors. The first is estimated cumulative savings in fiscal 2024 and 2025 from the Corporate Value Improvement Project of ¥52 billion, or ¥8 billion less than the targeted ¥60 billion. We expect to book ¥31.4 billion of that ¥52 billion this fiscal year. We did not include the remaining ¥8 billion in our initial forecast because it remains subject to adjustments and reviews. Second, we expect more than ¥10 billion in additional costs owing to such factors as wage increases and inflation. |
| RICOH Digital Products projects ¥15.5 billion in operating profit for fiscal 2025, down ¥13.2 billion year on year. Why? |
| The actual decline would be around ¥16 billion after factoring in a reversal of Corporate Value Improvement Project costs in fiscal 2024, anticipated savings in fiscal 2025, and one-time charges projected for fiscal 2025. The decrease would reflect three key factors. The first is higher expenses, owing largely to rising labor costs associated with salary hikes and inflation. Second, we trimmed our sales forecasts for Office Printing non-hardware products by 2%, which would also affect production. Third, we are reducing production volumes from last year's level. Last year, we boosted output to build offshore inventory in light of longer lead times for maritime transport and to front-load production of offerings for the U.S. market ahead of tariff changes. So, while production exceeded sales in fiscal 2024, output will be more restrained this year. |
| Your fiscal 2025 operating profit forecast for RICOH Digital Services is ¥59 billion yen, up sharply from the ¥32.2 billion posted in fiscal 2024. What were the main drivers? |
| In view of a reversal of expenses under the Corporate Value Improvement Project in fiscal 2024 and savings expect in fiscal 2025, we project an effective earnings decline of around ¥2 billion at the start of the year. We continue to anticipate a more than ¥10 billion rise in Office Services profits. That said, we have factored in a downside risk of around ¥7 billion from lower Office Printing non-hardware sales and about ¥5 billion in additional expenses owing to rising labor costs and inflation. We look for recurring revenue growth to boost Office Services earnings. In Japan, we will focus on offering added value for IT Services and Application Services in response to PC replacement demand, examples being maintenance and software-related services. In Europe, we will keep expanding DocuWare and other Application Services, as well as IT Services. |
| What are the breakdowns for operating losses under Eliminations and corporate of ¥12.9 billion in fiscal 2024 and ¥15 billion projected for fiscal 2025? |
| Eliminations and corporate operating losses typically range from ¥6 billion to ¥7 billion. In fiscal 2024, in addition to these usual amounts we posted ¥12.8 billion in expenses for the Second Career Support Program in Japan and recognized ¥9 billion in revenue from an arbitration ruling on a claim filed by a Chinese subsidiary. For fiscal 2025, also in addition to these usual amounts, we project a downside impact of ¥13 billion from tariffs and about ¥4 billion in savings from the Corporate Value Improvement Project. |
| As part of your responses to U.S. tariff policy, you noted plans to pass on costs by raising prices. How elastic is demand for MFPs? |
| There are several ways to pass on higher costs, such as raising catalog prices and tightening discounting. Competitors' pricing also affects sales volumes. It is hard to provide a specific elasticity figure because the impact on volumes varies with market conditions. |