Ricoh’s Medium-Term Management Strategy March 15, 2005 Masamitsu Sakurai President and CEO Ricoh Company, Ltd. Agenda - 14th Mid-Term Plan Review - 15th Mid-Term Plan Outline 2 ２００３年度 方針発表 1 14th Mid-Term Plan Review 3 Mid-Term Management Strategy Outline Sales (¥Bil) Net Profit (¥Bil) Sales 1,500 1,000 Net Profit 500 50 0 FY97/3 FY98/3 FY99/3 FY99/3 FY01/3 FY02/3 FY03/3 CS Management Business Structure Reform Reinforcement of Digital products Lineup Reinforcement of MFP Lineup Main Business Strategies i. B to C Transition ii. High-speed Machine Sales Expansion iii. Solution Business Overseas Business Strengthening *B to C Transition: Black/white to color transition *MFP: Multifunction Printer *CS: Customer Satisfaction 3Q forecast Contribute to productivity improvement and knowledge creation for individuals working anytime, anywhere Further Reinforcement of Technology Company-wide Structural Reform ２００３年度 方針発表 FY05/3 14th Plan 13th Plan 12th Plan FY04/3 4 2 Business Structure Reform Review of Main Strategies Strategy Deployment Results Color ratio increased B to C Transition - Color Line-up Strengthening - Strong Engine Launch High-speed Machine Expansion - Ricoh Printing Systems Consolidation - Sales Strengthening High-speed machine share gained Solution Business - Solution Platform Offering - Customizing Ability Strengthening - One stop, Total solution Major account deal expanding (FY02/3) (FY05/3 Q3) Japan 18% 34% Overseas 7% 29% 5 Business Structure Reform Sales Category Potion Change (Billion yen) 2,000 Other Other Businesses Businesses 1,500 Network System Solutions 1,000 20.8% 33.0% 49.2% Network I/O Systems 500 Imaging Imaging Solutions Solutions 0 FY99/3 FY02/3 FY05/3 (Forecast) 6 ２００３年度 方針発表 3 15th Mid-Term Plan Outline (FY06/3 – FY08/3) 7 Group Vision Winner in the 21st Century - Carry out all our activities based on “Customer driven” and highly appreciated by the customers. - Provide new value with the customers continuously, and establish rock steady relationship, and as a result we are continuing our growth and development. - Ricoh-like values should be clearly recognized by stakeholders, and the Ricoh brand globally established. 1. World No.1 Product Customer 2. Solid Relationship with Customers Employee 3. Vital and Motivated Culture Shareholder 4. Performance Excellence Society ２００３年度 方針発表 5. Responsible Action as a Corporate Citizen Corporate Value Increasing Customer 8 4 MFP/LP/IJ Market (2004-2007) *Hardware & consumables total Market size IJP/MFP B/W MFP B/W LP Color MFP Color LP ’04-’07 CAGR - B/W market is matured, but market is huge and steady - Color market has a great opportunity to grow 9 Market Environment (Customer) Customer Needs - One Stop Service, Total Solution - IT System Downsizing - Colorization - Available anytime, anywhere 10 ２００３年度 方針発表 5 Market Environment (Competitor) Tough Competition - Colorization Strengthening - Focusing Market - Low Pricing - Solution Offerings 11 Ricoh’s Core Competence Environmental Change Customer Needs Tough Competition We have opportunities to enlarge our revenue base! Core Competence & Strength Full-line Product Range Customer Contact (sales/service) Imaging Technology Solution Capability Image Processing & Data Processing Integration Technology Global Presence Human Resources/Financial Power ２００３年度 方針発表 12 6 Growth Strategy Society Market Economy Innovation Competitors Ricoh's Core Competence Growth Strategy 13 Financial Target Sales(Billion Yen) 2,500 FY08/3 FY08/3 Target: Target: Sales Sales 2,300.0 2,300.0 Billion Billion Yen Yen OP OP margin margin over over 10% 10% OP Margin (%) 12.0 10.0 2,000 8.0 1,500 6.0 1,000 4.0 500 0 (Billion Yen) Sales OP Net Profit EPS ROA ２００３年度 方針発表 2.0 0.0 FY02/3 (Result) 1,672.3 129.6 61.6 88.27yen 6.4% FY05/3 (Forecast) 1,815.0 147.0 85.0 105.07yen 7.4% FY08/3 (Target) 2,300.0 235.0 137.0 186.41yen 11.0% 14 7 Target Areas Printing Existing Area New Area - Downsized host Printing - GELJET printer - Print On Demand, etc - Office Color - Solutions - OEM Growth Opportunities Industry Business Emerging Market - China - Other areas - Existing business - New business 15 Growth Strategy Structure Industry Others GJ Growth Core Selection and Concentration Technology High-efficient Management LP Profit Engine Positive Investment for Growth Areas Creating Customer Value Solutions Sales and Profit Expansion Office MFP Differentiation Ultra Low-cost Operation Efficient Capital Usage Structural Reform 16 ２００３年度 方針発表 8 Strategy by Segments Office - Renewal of Color Line-up MFP - Improving Profitability by Solution Business LP&GJ - Enter High-end Production Printing Business - Low-end Products Strengthening Industry - Selection and Concentration - Positive Investment for Growth Areas Management - Core Process Reform (e.g. SCM) - R&D Site Optimization 17 Technologies for Growth Strategy MFP LP GJ Solution Platform Strong Engine GELJET Technology Industry Key Devices Key Modules etc Environmental Technology Security Strategic Technology 18 ２００３年度 方針発表 9 Toward New Growth Stage Investment for Growth - Acceleration of Colorization - R&D Strengthening - Selection and Concentration - Structural Reform Profit Contribution Precedent Investment Growth Engines Precedent Investment FY03/3 FY04/3 Cash Creation FY05/3 - FY06/3 Investment for Growth MFP (profit engine) LP (growth core) GJ (growth core) Industry (selection & concentration) FY07/3 FY08/3 New Growth Stage 19 At the End FY08/3 Target Sales 2,300.0 Billion Yen Net Profit 137.0 Billion Yen Corporate Value Increasing 20 ２００３年度 方針発表 10 The Company bases the estimates above on information currently available to management, which involves risks and uncertainties that could cause actual results to differ materially from those projected. ２００３年度 方針発表 11