Ricoh 2008 Annual Report Download - page 4

ANNUAL REPORT 20083
To Our Shareholders and Customers
Setting new records in sales and operating
income
In the year ended March 31, 2008 (fiscal 2008), the Ricoh
Group set new records again in consolidated net sales and
operating income and marked its 14th straight year of sales
growth. Consolidated net sales grew 7.3% over the prior fiscal
year to 2,219.9 billion yen (US$22.2 billion). Operating income
rose 4.1% to 181.5 billion yen (US$1.8 billion). Net income de-
clined 4.7% to 106.4 billion yen (US$1.0 billion) primarily due
to last year’s gain from the sale of discontinued operations.
During fiscal 2008, the Ricoh Group grew sales across all
of its produce lines: Office Solutions, Industrial Products, and
Other. The Office Solutions segment was the leading locomo-
tive of the growth, recording a continued increase in sales
of digital plain paper copiers (PPC), multifunctional printers
(MFP), printers, and other products both in Japan and over-
seas. In each product category, color products played a leading
role.
Gross profit increased primarily due to bolstered sales of
color MFP devices and other high value-added products, our
ongoing cost reduction efforts, and to a lesser extent, favor-
able exchange rates.
Meanwhile, selling, general, and administrative (SG&A) ex-
penses increased 8.5% from a year earlier to 746.2 billion yen.
As the Group has been focusing on developing new products,
its research and development (R&D) expenses remained at
high levels, recording an increase of 11.0 billion yen from the
year before to 126.0 billion yen (5.7% of net sales). Other ma-
jor factors in the rise of SG&A expenses include our intensified
efforts to extend the breadth of our business portfolio and to
improve our capabilities to deliver optimal solutions to custom-
ers.
The Group’s net income per share was 146.04 yen
(US$1.46) and return on equity was 9.9%. We announced an
annual dividend per share of 33.00 yen (US$0.33). This was
the eighth year in a row that we have increased our dividend.
Slightly negative cash-flow due to aggressive
investment for future growth
Free cash flow generated by operating activities and invest-
ing activities was a negative 3.9 billion yen (US$40 million).
Increase in cash disbursement due to the formation of a joint
venture with IBM Corporation more than offset the increase in
depreciation and assets due to the expansion of our business.
Total assets showed a decline of 29.0 billion yen from a
year earlier to 2,214.3 billion yen (US$22.1 billion). Sharehold-
ers’ equity increased by 9.2 billion yen to 1,080.1 billion yen
(US$10.8 billion), reflecting the increase in retained earnings.
Equity ratio improved by 1.1 percentage points to 48.8%.
Achievements in the final year of the 15th
Mid-Term Management Plan
The Ricoh Group aims to help customers improve their busi-
ness processes and productivity through its core Office Solu-
tions business. To this end, we have been working to change
the business structure of our Office Solutions whereby we will
not merely manufacture and sell copiers, printers, and other
equipment but offer optimal document management systems
supported by digitized and networked imaging equipment.
In its 15th Mid-Term Management Plan, the Group strived
to make its copiers and printers for general offices stronger
constituents of its revenue base. We promoted a shift from
black & white to color, and launched new products featuring
advanced digital technologies and network connectability in
order to provide solutions that best suit customers’ needs and
the business environment. The Group has also focused on ag-
gressively expanding its business in its targeted growth areas:
production printing and low-end products.
In fiscal 2008, the final year of the 15th Mid-Term Manage-
ment Plan, the Group expanded product offerings in the Office
Solutions category, marketing a number of new color multi-
functional copiers and color laser printers. With new products
characterized by excellent environmentally friendliness, high
image quality, and advanced security functions, the resulting