Ricoh s Medium-Term Management Strategy

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1 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

2 14th Mid-Term Plan Review 3 Mid-Term Management Strategy Outline Sales ( Bil) 1,500 Sales Net Profit ( Bil) 1, Net Profit 50 0 FY97/3 FY98/3 FY99/3 FY99/3 FY01/3 FY02/3 FY03/3 FY04/3 FY05/3 12th Plan 13th Plan 14th Plan 3Q forecast CS Management Reinforcement of Digital products Lineup Reinforcement of MFP Lineup *B to C Transition: Black/white to color transition *MFP: Multifunction Printer *CS: Customer Satisfaction Business Structure Reform Main Business Strategies i. B to C Transition ii. High-speed Machine Sales Expansion iii. Solution Business Overseas Business Strengthening Further Reinforcement of Technology Company-wide Structural Reform Contribute to productivity improvement and knowledge creation for individuals working anytime, anywhere 4

3 Business Structure Reform Review of Main Strategies Strategy Deployment Results B to C Transition - Color Line-up Strengthening - Strong Engine Launch Color ratio increased (FY02/3) (FY05/3 Q3) Japan 18% 34% Overseas 7% 29% 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 5 Business Structure Reform Sales Category Potion Change (Billion yen) 2,000 Other Businesses 1,500 1, % 33.0% 49.2% Network System Solutions Network I/O Systems 0 FY99/3 FY02/3 FY05/3 (Forecast) Imaging Solutions 6

4 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. Customer Customer Employee Shareholder 1. World No.1 Product 2. Solid Relationship with Customers 3. Vital and Motivated Culture 4. Performance Excellence Corporate Value Increasing Society 5. Responsible Action as a Corporate Citizen 8

5 MFP/LP/IJ Market ( ) Market size B/W MFP IJ- P/MFP B/W LP *Hardware & consumables total Color MFP Color LP 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

6 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 Imaging Technology Image Processing & Data Processing Integration Technology Customer Contact (sales/service) Solution Capability Global Presence Human Resources/Financial Power 12

7 Growth Strategy Market Society Innovation Economy Competitors Ricoh's Core Competence Growth Strategy 13 Financial Target Sales(Billion Yen) OP Margin (%) 2,500 2,000 FY08/3 Target: Sales 2,300.0 Billion Yen OP margin over 10% ,500 1, (Billion Yen) (Result) (Forecast) (Target) FY02/3 FY05/3 FY08/3 Sales OP 1, , , Net Profit EPS 88.27yen yen yen ROA 6.4% 7.4% 11.0%

8 Target Areas Existing Area - Office Color - Solutions -OEM Printing New Area - Downsized host Printing -GELJET printer - Print On Demand, etc Growth Opportunities Emerging Market -China - Other areas Industry Business - Existing business - New business 15 Growth Strategy Structure Sales and Profit Expansion Creating Customer Value High-efficient Management Office Industry Others Technology Solutions Ultra Low-cost Operation Efficient Capital Usage MFP LP GJ Selection and Concentration Differentiation Profit Engine Growth Core Positive Investment for Growth Areas Structural Reform 16

9 Strategy by Segments Office MFP LP&GJ - Renewal of Color Line-up - Improving Profitability by Solution Business - 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 Industry Solution Platform Strong Engine GELJET Technology Key Devices Key Modules etc Environmental Technology Security Strategic Technology 18

10 Toward New Growth Stage Investment for Growth - Acceleration of Colorization - R&D Strengthening - Selection and Concentration - Structural Reform Profit Contribution Precedent Investment Precedent Investment Growth Engines - MFP (profit engine) - LP (growth core) - GJ (growth core) - Industry (selection & concentration) FY03/3 FY04/3 FY05/3 FY06/3 FY07/3 FY08/3 Cash Creation Investment for Growth New Growth Stage 19 At the End FY08/3 Target Sales 2,300.0 Billion Yen Net Profit Billion Yen Corporate Value Increasing 20

11 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.

Ricoh s s Medium-Term Management Strategy

Ricoh s s Medium-Term Management Strategy March 4, 2003 Masamitsu Sakurai President and COO Ricoh Company, Ltd. AGENDA I. Outline of Medium-Term Management Strategy II. Main Strategies 1 Main Business