CAN RICOH QUADRUPLE MARGIN IN 5 YEARS ?

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CAN RICOH QUADRUPLE MARGIN IN 5 YEARS ?

 user 2010-03-15 at 11:11:08 am Views: 62
  • #23700

    http://uk.reuters.com/article/idUKTOE62B00M20100312
    CAN RICOH QUADRUPLE MARGIN IN 5 YEARS
    ?

    TOKYO, March 2010- Japan’s Ricoh said it aims to
    more than quadruple its operating profit margin to 10 percent in five
    years as the world’s No.1 copier maker focuses on new businesses with
    growth potential such as digital commercial printers.

    Ricoh,
    which also targets a return on equity of 12 percent in five years in
    comparison with 1.6 percent now, has suffered a profit tumble following
    the global downturn as corporate clients slashed spending on copiers and
    printers.A global trend to reduce paper consumption out of growing
    concerns over the environment is also casting a shadow over the
    prospects for office machine demand.”We have a rough image for the next
    five years, where our conventional businesses might not grow that much,
    but our new businesses including production printing will hopefully
    double,” Ricoh CFO Zenji Miura told a business strategy briefing.

    Production
    printers, or digital commercial printers, are used to print large
    documents such as product manuals and direct mail items quickly and in
    bulk, and are a fast-growing segment of the global office equipment
    market.Of Ricoh’s total annual revenues of 2 trillion yen ($22 billion),
    traditional operations including regular printers and copiers account
    for 1.7 trillion yen, while new businesses such as digital commercial
    printers and IT services make up the rest.

    Ricoh, which competes
    with Canon Inc , Xerox Corp  and Konica Minolta Holdings Inc , bought
    International Business Machines Corp’s  digital commercial printing
    operations for $725 million in 2007.”We are fighting a difficult fight
    to get our (production printing) machines installed,” Ricoh Chief
    Executive Shiro Kondo said. “But those efforts will start bearing fruit
    slowly but steadily from the next business year on.”Kondo, a 37-year
    company veteran, took Ricoh’s helm in 2007 as its first top executive
    with an engineering background.

    Fresh out of college, he was
    involved in the development of an advanced facsimile, which was dubbed
    then the world’s first high-speed office fax machine, and later
    sprearheaded the development of Ricoh’s first digital copier for
    overseas markets.An avid dealmaker on weekdays and the driving force
    behind Ricoh’s purchase of IBM’s commercial printing operation and its
    $1.6 billion acquisition in 2008 of U.S. office machine distributor Ikon
    Office Solutions, Kondo is a devoted gardener at weekends.

    Following
    the announcement, shares of Ricoh closed up 1.5 percent at 1,371 yen,
    outperforming the Nikkei average .N225, which rose 0.8 percent.Ricoh
    held a 21.2 percent share in the global copier market in 2009, ahead of
    Xerox’s 20.1 percent and Canon’s 15.7 percent, according to data from
    research firm Gartner.

    * Targeted 10 pct
    margin compares with 2.3 pct for
    2009/10
    * Aims for ROE of 12 pct in 5 years vs 1.6 pct for 2009/10
    * Sees sales from new businesses doubling in 5 years
    * Shares close up 1.5 pct vs Nikkei’s 0.8 pct gain