Today we made a timely disclosure about the adjustment of our business performance forecast for the year ending March 31, 2018.
I personally feel responsible for any concerns that you, our customers, partners and shareholders may have as a result of this adjustment.
This adjustment is coming mainly from the amortization caused by our acquisitions in North America. This is a matter of appropriate accounting, and doesn’t have any impact on our cash flow.
So, let me tell you what caused this. Under our 19th mid-term management plan, “RICOH Resurgent”, we strengthened our core business and undertook structural reforms in order for us to apply our management resources to growing the business.
With the support of all our stakeholders, our structural reforms are on schedule and we have succeeded in expanding our value proposition. We launched our growth strategy, “RICOH Ignite”, on February 6, with three main strategies. To ensure their execution we reset our business management units based on our current six business domains. Based on the profit we can expect from each unit we evaluated the business assets in each unit. Then we found that we needed to impair the value of some of these assets.
The assets that we needed to impair are mainly companies we acquired in the past, principally IKON Office Solutions (2008) and mindSHIFT Technologies (2014). With this impairment, our business P&L forecast will show a negative adjustment to our operating Income. To reiterate, this accounting action has been caused by the revaluation of our assets, and doesn’t have any impact on our cash flow.
This impairment is regrettably negatively impacting our business performance for this year but this is necessary in order to execute our growth strategy, change our business structure and move forward for the future.
In Fiscal 2017, we have been working on structural reforms to strengthen our profitability and modify our asset base. In 2018, my role is now to ensure we execute our growth strategy.
Please continue to support the Ricoh group as we move forward to an exciting future.
Yoshinori “Jake” Yamashita
President & CEO
Ricoh Company Ltd.