海角社区

The global business climate continues to evolve rapidly. Internationally, policy and regulatory changes and geopolitical volatility are making the global economic outlook challenging to navigate. We must also pay close attention to supplementary trends impacting the global economy, such as restrained corporate investment.

Remote and hybrid work are now commonplace, and side and multiple jobs are more prevalent, broadening options for where and how people work. Business processes themselves are undergoing major changes with the evolution of technologies such as AI, migrating more paper-based workflows into digital. As print output declines, demand is growing for digital services that digitize analog information鈥攊ncluding documents, meeting audio, and any valuable data from workplaces鈥攖o improve workflow efficiency.

Since our founding in 1936, 海角社区has always remained close to our customers in their work. We view every setting where people work鈥攊ncluding physical offices and digital environments鈥攁s the workplace, supporting information sharing and collaboration through the power of digital technology. We help people at work fully realize their potential by unleashing their creativity.

I believe that there are direct and indirect approaches to fostering creativity. An indirect approach enhances work efficiency and productivity to generate time for people to engage in more creative work. A direct approach is to leverage diverse data and enable collaboration, thereby enhancing people鈥檚 creativity. By linking these approaches to worker fulfillment, accomplishment, and self-realization, we bring the 海角社区Way mission of Fulfillment through Work to life.

In Transformation of Headquarters, we streamlined indirect functions and concentrated R&D investment in the workplace domain, a growth area. We optimized our R&D portfolio through a mix of internal initiatives, open innovation projects with external partners, and a reassessment of existing research priorities.

Acceleration of Business Selection and Concentration entailed decisive portfolio management initiatives. We divested the Optical Business, exited the 海角社区eDiscovery business in North America, and withdrew from the PLAiR environmental new materials business. These moves redirected resources to the workplace domain.

Regarding Transformation of Office Printing Business Structure, we strengthened operations to secure profitability despite declining sales as a result of the shrinking market. In July 2024, we established ETRIA, a joint venture with Toshiba Tec, and Oki Electric Industry joined the venture in October 2025.

ETRIA standardizes engine platforms across participating companies to reduce procurement, development, and production costs through economies of scale. Each partner differentiates through its software and user interfaces, enhancing their competitive advantages. This model strengthens cost efficiency while enabling each company to roll out distinct products tailored to customer needs.

These cost-structure reforms delivered savings of approximately 楼20 billion in fiscal 2024, exceeding initial projections and progressing smoothly. We project total savings of 楼52 billion over two years through the end of fiscal 2025, and we are intensifying efforts to capture further gains.

We are shifting resources generated by these initiatives to growth areas to Accelerate Office Services鈥� Profit Growth. We are raising profitability by building recurring revenue, which accrues over the lifetime of a product or service. Each new contract significantly improves capital returns, as adding more requires little additional investment. In fiscal 2024, recurring revenue rose 14% year on year to 楼397.5 billion, reflecting higher Office Services adoption rates among existing customers and growth in new customers. We achieved the 楼380 billion target ahead of schedule.

Still, we face two key challenges. The first is that Office Printing hardware and non-hardware revenues declined more than expected. Hardware unit sales fell short due to what happened in our largest markets, Europe and the Americas. In Europe, the economy and demand fluctuated while competition intensified. In the Americas, office equipment consolidated due to changing workstyles. Non-hardware revenue was also below expectations.

The second challenge is slower than anticipated Office Services growth. While recurring revenues grew steadily, overall Office Services sales fell below expectations.

To address these challenges, we are working to expand Office Services earnings by securing more high-value recurring revenue agreements and driving performance improvements.

We have faced strong criticism for falling short of the more than 9% return on equity (ROE) target initially set for fiscal 2025 under the 21st Mid-Term Management Strategy. We take this situation seriously and will continue to transform our earnings structure under the Corporate Value Improvement Project. Over the medium to long term, we aim to deliver an ROE exceeding 10%. We will keep improving ROE through two key priorities.

Our first priority is to accelerate recurring revenue growth. As recurring revenue expands, capital efficiency improves, and ROE rises. We are driving Office Services growth through targeted acquisitions, mainly in Europe. Many acquired companies are relatively small but provide high-value services and are leading players in their markets. By expanding their services across Europe, we aim to accelerate recurring revenue growth and generate synergies. We are leveraging our common platform, RICOH Smart Integration, to improve profitability while scaling these offerings. In Commercial Printing, increasing numbers of machines-in-field are being driven by new product launches, among other factors, and are steadily generating stable recurring revenue. At the same time, we remain committed to minimizing revenue declines in Office Printing, which could otherwise weigh on ROE. Our second priority is to enhance capital returns through asset-light management. As we shift further toward digital services, the need for capital investment decreases. By expanding contributions from DocuWare and other SaaS* businesses, we are improving the cash conversion cycle, advancing asset-light management, and strengthening capital returns. We are also accelerating portfolio reviews, concentrating management resources and capital on growth areas, while reinforcing asset management and optimizing the balance sheet in line with our position as a digital services company.

Ricoh鈥檚 founder Kiyoshi Ichimura established The Spirit of Three Loves鈥斺�淟ove your neighbor, Love your country, Love your work鈥濃�攂elieving that a company can only endure if it enriches all stakeholders. This conviction remains the foundation of our daily business activities.

Building trust with all stakeholders, from customers and partners to shareholders, employees, and their families, is essential.

Since becoming CEO, I have regularly held global town hall meetings to deepen dialogue with employees. Each session has made communication more open and candid. I consistently stress the importance of leveraging Ricoh鈥檚 strengths鈥攐ur customer base, customer touchpoints, and intellectual property鈥攁s we advance our transformation as a digital services company. I also emphasize that while our purpose remains unchanged, our approaches must adapt flexibly to shifts in society and to meet customer needs. I believe that when employees embrace change, consider how best to support customers in their work, and proactively hone their skills, they and 海角社区can grow together.

Through these activities, we remain fully committed to enhancing corporate value so that we can deliver returns commensurate with the expectations of shareholders and investors through sustainable growth. We will accelerate recurring revenue, boost ROE above 10% as quickly as possible, and keep enhancing capital returns to maintain that level.

We will continue engaging with stakeholders to foster a shared understanding and support for our initiatives today and tomorrow. With your ongoing trust and support, we are confident that we will deliver enduring growth and corporate value.

We adopted the Group finance policies of Cash Belongs to Corporate and Treasury Centralization to use funds more effectively and enhance cash management efficiency globally. By consolidating funding, foreign exchange (FX) strategy, and other functions, the Treasury Department acts as an in-house bank, providing financial services to Group companies while maintaining flexibility and cost efficiency. This approach strengthens financial discipline across the Group and reduces overall financial costs.

These global treasury operations are managed by the Netting Center, a U.K. treasury subsidiary supervised by the Treasury Department, in coordination with regional treasury functions, leveraging expertise to advance sophisticated treasury processes.

In transitioning into a digital services company, we aim to build an appropriate capital structure based on risk assessment. We draw on debt to fund investments, balancing debt and equity in our businesses. We leverage debt for Office Printing and other mature, stable businesses, while allocating equity mainly to higher-risk growth areas.

Operating cash flows generated through business activities will be allocated in a planned manner to growth investment shareholder returns. As we transition into a digital services company, we will continue disciplined growth investments to maximize corporate value, including M&A in the Workplace Experience and Application Services domains. These investments will be funded primarily through operating cash flow, supplemented by the strategic use of debt financing.

In fiscal 2025, we will secure growth capital, taking into account the uncertain business environment and credit ratings and funding risks. We will flexibly adjust and optimize our capital structure in line with the progress with growth investments and changes in our business structure.

Our shareholder return policy is to maintain a total return ratio of 50%. We aim to steadily increase dividends in line with profit growth, while maintaining an attractive dividend yield. We will also consider share repurchases and other supplementary return measures. These will be carried out flexibly and at the appropriate timing, based on the business environment, progress with growth investments, and our approach to maintaining an optimal capital structure, with the aim of enhancing total shareholder return.

Based on this policy, we repurchased 楼30 billion in shares between February 7, 2024, and August 30, 2024, comprising 楼7.5 billion in fiscal 2023 and 楼22.5 billion in fiscal 2024. We retired those shares on September 30, 2024. We additionally repurchased 楼30 billion in shares on December 3, 2024, retiring them on January 31, 2025. For fiscal 2025, we plan to pay an annual dividend of 楼40 per share, up 楼2 from a year earlier.

We aim to maximize shareholder value and corporate value while meeting the expectations of stakeholders. We incorporate expert insights and assess capital costs from multiple perspectives and methodologies, striving to generate returns that exceed those costs. To this end, we conduct rigorous business portfolio management, evaluating business units using indicators such as return on invested capital (ROIC) and market attractiveness, and optimizing resource allocation based on rational decision-making. In this portfolio management, we have added digital services affinity as a third axis, alongside traditional measures of profitability and marketability, to evaluate businesses objectively. Based on this framework, we classify business units into four categories鈥攇rowth acceleration, earnings maximization, strategic transformation, and business revitalization鈥攖hereby reinforcing the management foundation of a digital services company.

We set key performance indicators from individual organizational and company-wide perspectives that consider the statement of profit or loss and the balance sheets.

To achieve sustainable capital profitability with ROE consistently above 10% in the medium to long term, each business unit and department manages initiatives using ROIC trees to pursue returns that exceed capital costs. Key measures are also incorporated into a company-wide ROIC tree, and for headquarters measures that are difficult to quantify financially, we define them as key performance indicators and link them to future financial performance. We monitor this as the Ricoh-style ROIC tree on a regular basis, clarifying its relationship to financial targets while managing both KGIs* and KPIs.

We uphold our policy of a 50% total return ratio and aim to enhance total shareholder return through steady dividend increases and flexible additional return measures.

After management announced full-year financial results for fiscal 2023 on May 7, 2024, the share price temporarily dropped because the fiscal 2024 operating profit forecast fell short of market expectations. The valuation began to recover as investors better understood and accepted the Company鈥檚 initiatives to enhance corporate value.

In early August 2024, stock prices dropped sharply across the market, particularly for export and high-tech related companies, following the Bank of Japan鈥檚 decision to raise its interest rate policy and hinting at further hikes, concerns over a U.S. economic slowdown, and rapid appreciation of the yen against the dollar. Toward year-end, Ricoh鈥檚 share price continued to outperform the broader market bolstered by growing expectations for progress with the Corporate Value Improvement Project and cost structure reforms. From the start of 2025, the share price trended slightly downward amid concerns over the global economic and tariff policies but remained above TOPIX levels throughout most of the year.