Ricoh : Consolidated Results for the First Quarter Ended June 30, 2022

August 3, 2022

QUARTERLY REPORT

First Quarter ended June 30, 2022

(Results for the Period from April 1, 2022 to June 30, 2022)

Performance Outline (Consolidated)

	Three months	Three months
	ended	ended	Change
	June 30, 2021	June 30, 2022
	Results	Results
Domestic sales	171.3	163.7	(4.4％)
Overseas sales	253.4	295.5	16.6％
Sales	424.8	459.3	8.1％
Gross profit	152.3	168.0	10.3％
Operating profit (loss)	5.6	9.6	69.9％
Profit (loss) before income tax expenses	7.6	11.2	45.8％
Profit (loss) attributable to owners of the	4.7	7.5	58.6％
parent
Exchange rate (Yen/US$)	109.50	129.51	20.01
Exchange rate (Yen/EURO)	131.92	138.02	6.10
Earnings per share attributable to owners of	6.77	11.98	5.21
the parent-basic (yen)
Earnings per share attributable to owners of	6.77	11.98	5.21
the parent-diluted (yen)
Cash flows from operating activities	47.8	19.8	(28.0)
Cash flows from investing activities	(14.0)	(14.5)	(0.4)
Cash flows from financing activities	(43.0)	(7.0)	35.9
Cash and cash equivalents at end of period *1	321.6	243.4	(78.2)
Capital expenditures *2	7.5	8.2	0.6
Depreciation *2	10.4	10.1	(0.3)
R&D expenditures	22.9	23.1	0.2
	March 31, 2022	June 30, 2022	Change

(Billions of yen)

Year ending

March 31, Change 2023

Forecast

795.0 12.7％

1,255.0 19.1％

2,050.0 16.6％

1. 18.0％

1. 124.7％

94.0 111.8％

63.0 107.4％

126.13 13.77

135.76 5.21

102.11 56.76

102.09 56.75

－	－
－	－
－	－
－	－

41.03.6

1. 2.1

1. 5.2

Total assets	1,853.2	1,930.7	77.5
Equity attributable to owners of the parent	902.0	933.4	31.4
Interest-bearing debt *3	235.4	262.6	27.2
Equity attributable to owners of the parent	48.7	48.3	(0.4)
ratio (%)
Equity per share attributable to owners of	1,416.08	1,491.07	74.99
the parent (yen)

*1 The amounts shown as "cash and cash equivalents at end of the period" are shown on the condensed consolidated statement of cash flows. *2 The amounts presented in capital expenditures and depreciation are for property, plant and equipment.

*3 The amounts are shown bonds and borrowings.

Ricoh Company, Ltd.

• The result forecasts and forward-looking statements included in this document are based on information available to the Company as at the date of submission of this quarterly report and certain assumptions that the Company considers reasonable. The Company makes no guarantees with respect to the achievement of its result forecasts or forward-looking statements. Actual results might be significantly different from the forecasts in the document, depending on various factors. For the assumptions for forecast and other related information, please refer to "3. Qualitative Information on Forecasted Consolidated Financial Results" on page 5.

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Ricoh Company, Ltd. and its Consolidated Subsidiaries

Financial Highlights for the First Quarter Ended June 30, 2022 [Prepared on the basis of International Financial Reporting Standards]

1. Results for the Period from April 1, 2022 to June 30, 2022

(1) Operating Results

		(Millions of yen)
	Three months ended	Three months ended
	June 30, 2021	June 30, 2022
Sales	424,804	459,341
(% change from the previous corresponding period)	20.6	8.1
Operating profit (loss)	5,666	9,626
(% change from the previous corresponding period)	－	69.9
Profit (loss) before income tax expenses	7,682	11,201
(% change from the previous corresponding period)	－	45.8
Profit (loss) for the period	4,836	7,622
(% change from the previous corresponding period)	－	57.6
Profit (loss) attributable to owners of the parent	4,787	7,591
(% change from the previous corresponding period)	－	58.6
Comprehensive income (loss)	9,752	51,552
(% change from the previous corresponding period)	－	428.6
Earnings per share attributable to owners of the parent-basic (yen)	6.77	11.98
Earnings per share attributable to owners of the parent-diluted (yen)	6.77	11.98

Notes: Earnings per share attributable to owners of the parent (basic and diluted) are based on profit (loss) attributable to owners of the parent.

(2) Financial Position

			(Millions of yen)
		March 31, 2022	June 30, 2022
	Total assets	1,853,254	1,930,789
	Total equity	905,825	937,257
	Equity attributable to owners of the parent	902,042	933,469
	Equity attributable to owners of the parent ratio (%)	48.7	48.3
2. Dividend Information
		Year ended	Year ending
		March 31, 2022	March 31, 2023
		(Actual)	(Forecast)
	Cash dividends, applicable to the year (yen)	26.00	34.00
	Interim (yen)	13.00	17.00
	Year-end (yen)	13.00	17.00
Notes: Revision of expected dividends during this period: No
3. Forecast of Operating Results from April 1, 2022 to March 31, 2023
		(Millions of yen)
		Year ending
		March 31, 2023
	Sales	2,050,000
	(% change from the previous corresponding period)	16.6
	Operating profit (loss)	90,000
	(% change from the previous corresponding period)	124.7
	Profit (loss) before income tax expenses	94,000
	(% change from the previous corresponding period)	111.8
	Profit (loss) for the period	63,800
	(% change from the previous corresponding period)	108.3
	Profit (loss) attributable to owners of the parent	63,000
	(% change from the previous corresponding period)	107.4
	Earnings per share attributable to owners of the parent-basic (yen)	102.11

Notes: Revision of forecast of consolidated operating results during this period: No

4. Others

(1) Changes in significant subsidiaries: No New: － (Company name: － ) Exclusion: － (Company name: －)

(2) Changes in accounting policies and accounting estimate

(i) Changes in accounting policies required by IFRS: No

(ii) Other changes: No

(iii) Changes in accounting estimate: No

(3) Number of common stock outstanding (including treasury stock):

As of June 30, 2022: 637,468,178 shares; As of March 31, 2022: 637,468,178 shares

(4) Number of treasury stock:

As of June 30, 2022: 11,428,322 shares; As of March 31, 2022: 468,700 shares

(5) Average number of common stock:

Three months ended June 30, 2022: 633,526,180 shares; Three months ended June 30, 2021: 706,901,957 shares

Notes: The Company has established the Board Incentive Plan trust in which beneficiaries include Directors and Executive Officers. The

shares owned by the trust account relating to this trust are accounted for as treasury shares. (As of June 30, 2022: 388,700 shares; As of

March 31, 2022: 398,600 shares)

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Qualitative Information on Consolidated Financial Results for the Quarter under Review 1. Qualitative Information on Consolidated Business Results

* Overview of the First Quarter of Fiscal 2022 (April 1 - June 30, 2022)

The Ricoh's goal under the two years of its 20th Mid-Term Management Plan is to become a digital services company that is a work productivity innovator.

In this last year of 20th Mid-Term Management Plan, under the business unit structure that we adopted in April 2021, each business unit will operate autonomously and accelerate efforts to reinforce its structure while swiftly tackling market changes. We will cultivate human resources to support our drive to become a digital services company and overhaul enterprise systems to unite our entire organization in transitioning to drive digital services growth.

Although COVID-19 infections continue to be a major concern, the global economy is on a gradual recovery path with economic activity resuming due to increased vaccination rates in major countries and elsewhere. On the other hand, prices are rising due to ongoing shortages of semiconductors and other materials, the prolonged Russia/Ukraine situation, and other factors.

In Japan, the number of COVID-19 cases has decreased and economic activity has recovered. On the other hand, prices are rising due to higher raw material prices and the depreciation of the yen. In the U.S., prices and wages are rising amid negative GDP growth, and the monetary authorities are taking tight monetary policy to control inflation. In Europe, the economy continues to recover, but the impact on the economy, including energy issues, has started to become apparent due to the prolonged Russia/Ukraine situation and deteriorating relations with Russia. In other regions, in China, the zero-COVID policy against the spread of COVID-19 infections led to a lockdown of Shanghai and other cities, halting economic activity, and production delays due to plant and port shutdowns affected the export to other countries. During this period, the average exchange rates of Japanese yen against U.S. dollar and Euro were ¥129.51 (up ¥20.01 from the previous corresponding period) and ¥138.02 (up ¥6.10 from the previous corresponding period) respectively.

Sales for the first quarter increased by 8.1% as compared to the previous corresponding period, to ¥459.3 billion. Growth and sales recovered moderately due to the continued impact of material shortages and COVID-19. However, sales increased mainly due to the impact of the depreciation of the yen.

In Japan, sales decreased by 4.4% as compared to the previous corresponding period. Our supply constraints on our products and ICT-based products due to a continuing shortage of parts and materials affected our sales activities in the office services and the office printing businesses. On the other hand, in the office services business, sales of the Scram series products, which we aim to grow, increased as security-related services for small and medium-sized companies that do not rely on ICT-based products, new services to comply with revisions to the Electronic Record Retention Law, and systems operations for medium-sized companies performed well.

Sales in the Americas increased by 24.6% (an increase of 5.3% excluding foreign currency exchange fluctuations) as compared to the previous corresponding period. Sales of edge devices in the office printing business increased, and the office services business, including IT- related services, performed well. Sales in the commercial printing business also recovered.

Sales in the Europe, the Middle East, and Africa increased by 13.9% (an increase of 8.9% excluding foreign currency exchange fluctuations) as compared to the previous corresponding period. Sales of edge devices decreased in the office printing business due to a shortage of materials, but sales of non-hardware increased. The effects of acquisitions and strong sales of package led strong performance of the office services business.

Sales in other regions increased by 2.8% (a decrease of 7.3% excluding foreign currency exchange fluctuations) as compared to the previous corresponding period. Sales declined due to the impact of strict activity restrictions accompanying China's zero-COVID policy, although the depreciation of the yen contributed to an increase of sales.

As a result, sales in the overseas market increased by 16.6% as compared to the previous corresponding period. Excluding effects of foreign currency fluctuations, sales in overseas would have increased by 4.8% as compared to the previous corresponding period.

Gross profit increased by 10.3% as compared to the previous corresponding period, to ¥168.0 billion. In response to rising commodity prices and rising procurement costs caused by shortages of materials, controlling price by individual business units such as the price pass-through kept margin and gross profit also improved by continuous effort of the structural reinforcement in development and manufacturing activities, as well as the depreciation of the yen.

Selling, general and administrative expenses increased by 6.2% as compared to the previous corresponding period, to ¥159.6 billion mainly due to the depreciation of the yen.

Other income decreased compared to the previous corresponding period primarily due to gain on the sale of U.S. subsidiary land in the previous first quarter.

Operating profit increased by ¥3.9 billion compared to the previous corresponding period, to ¥9.6 billion.

Net financial expenses were greater than in the previous corresponding period, reflecting lower foreign exchange gains. The share of profit of investments accounted for using the equity method was higher, reflecting better performances among equity-method affiliates such as Ricoh Leasing Co., Ltd.

Profit before income tax expenses increased by ¥3.5 billion as compared to the previous corresponding period, to ¥11.2 billion.

Income tax expenses increased by ¥0.7 billion as compared to the previous corresponding period mainly due to a increase in profit before income tax expenses.

As a result, profit attributable to owners of the parent increased by ¥2.8 billion as compared to the previous corresponding period, to ¥7.5 billion.

Comprehensive income increased to ¥51.5 billion, owing largely to an increase in profit attributable to owners of the parent and translation adjustments for foreign operations.

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* Review by Business Segment

Digital Services

Digital Services sales were ¥368.5 billion and increased by 6.4% as compared to the previous corresponding period. In the office services business, sales of ICT-based products and related services in Japan were affected by a shortage of materials, but sales of the Scram series products increased. Overseas sales also contributed to increased sales, including sales of package in Europe and sales of acquired IT service companies. In the office printing business, sales of edge devices decreased due to a material shortage, but sales of non-hardware increased due to a rebound in economic activity and returns to offices. In response to rising costs, we secured profits by implementing pricing controls, such as the price pass-through and selling value-added products. At the same time, we implemented profit improvement measures such as structural reform of service activity.

As a result, Digital Services operating profit was ¥2.9 billion and increased by ¥1.5 billion as compared to the previous corresponding period.

Digital Products

Digital Products sales were ¥3.7 billion and increased by 11.6% (Sales including intersegment sales were ¥99.4 billion and increased by 11.1%) as compared to the previous corresponding period. Although production activities were affected by a shortage of materials and lockdown in Shanghai, sales increased due to increased production of A3 MFPs and parts & supplies compared to the previous corresponding period. While procurement costs rose due to the sharp rise in material prices, production of relatively high value-added products was increased and flexible production efforts were made including cost reduction activities through structural reforms of manufacturing.

As a result, Digital Products operating profit was ¥12.2 billion and increased by ¥3.2 billion as compared to the previous corresponding period.

Graphic Communications

Graphic Communications sales were ¥51.8 billion and increased by 22.0% as compared to the previous corresponding period. In the commercial printing business, sales increased as economic activities recovered in Europe and Americas. Despite the impact of material shortages, sales of production printers increased as we worked to secure production volumes, including procuring alternative components from the market. In Europe and Americas, non-hardware continued to recover, particularly in the printing industry. In the industrial printing business, sales increased due to strong sales of components mainly for sign graphics, despite the impact of lockdown in the mainstay Chinese market. In the commercial printing business, although costs rose and profits were squeezed by the market procurement to secure production volumes, improvements in development, production, and service activities and the depreciation of the yen contributed to generate profit.

As a result, Graphic Communications operating profit was ¥2.4 billion and increased by ¥1.4 billion as compared to the previous corresponding period.

Industrial Solutions

Industrial Solutions sales were ¥30.3 billion and increased by 12.6% as compared to the previous corresponding period. In the thermal media business, sales of release paper-free labels increased and demand in the U.S. logistics industry expanded. In the industrial products business, sales were down caused by decrease in production by automotive-related customers due to lockdown in China. In the electronics business, sales to industrial robots were firm, despite a continuing shortage of materials.

As a result of absorbing the impact of the sharp rise in material prices through pricing control including price pass-through, Industrial Solutions operating profit (loss) was ¥0.7 billion (loss), improved by ¥0.2 billion as compared to the previous corresponding period.

Other

Other segment sales were ¥4.7 billion and decreased by 14.3% as compared to the previous corresponding period. We are promoting the creation of new businesses, including the development of new customers for RICOH 360 cloud services, the commencement of demonstration experiments for inspection services for social infrastructures, and the strengthening of our drug discovery support business. As a result of up-front investments to create new businesses, including these activities, Other segment operating profit (loss) was ¥3.0 billion (loss), improved by ¥0.2 billion from the previous corresponding period.

• Digital services as a business segment is mainly limited to the office services business and the office printing sales business. This segment does not include all digital services, which Ricoh aims to transform into "a digital services company" that connects workplaces and support worker's creativity. "Digital Services" provided as "a digital services company" is included in all the business segments as well as Digital Services business segment.

2. Analysis of Consolidated Financial Position

*Assets, Liabilities and Equity

Total assets increased by ¥77.5 billion as compared to the end of the previous fiscal year, to ¥1,930.7 billion. The yen depreciated significantly from the end of the previous fiscal year, producing translation differences for foreign assets. After excluding the foreign exchange impact, total assets increased by ¥2.2 billion. The exchange rates for major currencies for the yen at end of the first quarter were ¥136.68 against the U.S. dollar (up ¥14.29 from the previous fiscal year) and ¥142.67 against the euro (up ¥5.97).

"Trade and other receivables" decreased by ¥9.7 billion from the end of the previous fiscal year, mainly due to the collection of receivables recorded at the end of the previous fiscal year. On the other hand, "Inventories" increased by ¥32.0 billion due to inventory formation for sales and securing safe inventories.

Total liabilities increased by ¥46.1 billion as compared to the end of previous year, to ¥993.5 billion. While "Bonds and borrowings" in current liabilities decreased by ¥13.9 billion due to repayment of borrowings, those in non-current liabilities increased by ¥41.2 billion as a result of financing by syndicate loans.

Total equity increased by ¥31.4 billion as compared to the end of previous fiscal year, to ¥937.2 billion. "Treasury stock", a decreasing item in shareholders' equity, increased by ¥11.8 billion because of share repurchase to increase shareholder returns. In addition, exchange differences on translation of foreign operations rose by ¥44.9 billion due to the depreciation of the yen.

Equity attributable to owners of the parent therefore increased by ¥31.4 billion, to ¥933.4 billion. The equity attributable to owners of the parent ratio remained stable, at 48.3%, although it was down by 0.4 point from the end of the previous fiscal year due to capital policies such as share repurchase and new borrowings.

* Cash Flows (Three months from April 1, 2022 to June 30, 2022)

Net cash provided by operating activities decreased by ¥28.0 billion as compared to the previous corresponding period, to ¥19.8 billion. The expenditures increased mainly due to increase in inventories.

Net cash used in investing activities increased by ¥0.4 billion as compared to the previous corresponding period, to ¥14.5 billion.

Free cash flow (net cash provided by operating activities plus net cash used in investing activities) totaled ¥5.3 billion, down by ¥28.4 billion.

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Net cash used in financing activities decreased by ¥35.9 billion as compared to the previous corresponding period, to ¥7.0 billion. During the first quarter of this fiscal year, the proceeds increased due to syndicate loans. On the other hand, the Company acquired ¥11.8 billion of treasury stock (¥25.2 billion during the previous corresponding period), decreasing in expenditures compared to the previous corresponding period.

As a result, the balance of cash and cash equivalent at the end of period increased by ¥9.4 billion as compared to the end of previous fiscal year, to ¥243.4 billion.

3. Qualitative Information on Forecasted Consolidated Financial Results

Since the business results and the business environment including foreign currency fluctuations in the first quarter were within expectation, there was no change on the forecast of sales, gross profit, operating profit, profit before income tax expenses and profit attributable to owners of the parent from those previously announced in May this year.

Ricoh maintains the assumed exchange rates set forth in May of ¥125 against the U.S. dollar and of ¥135 against the euro in and after the second quarter while the actual exchange rates during the first quarter have been incorporated into exchange rate assumptions for the full year.

Exchange Rate Assumptions for the full year ending March 31, 2023
US$ 1 =	¥126.13	(¥112.36 in previous fiscal year)
EURO 1 =	¥135.76	(¥130.55 in previous fiscal year)
					(Billions of yen)
					Year ending
				Year ended	March 31, 2023
			March 31, 2022	(Forecast)	Change
	Domestic sales		705.2	795.0	12.7％
	Overseas sales		1,053.3	1,255.0	19.1％
	Sales			1,758.5	2,050.0	16.6％
	Gross profit		622.6	735.0	18.0％
	Operating profit (loss)	40.0	90.0	124.7％
	Profit (loss) before income tax expenses	44.3	94.0	111.8％
	Profit (loss) attributable to owners of the parent	30.3	63.0	107.4％

• The result forecasts and forward-looking statements included in this document are based on information available to the Company as at the date of submission of this quarterly report and certain assumptions that the Company considers reasonable. The Company makes no guarantees with respect to the achievement of its result forecasts or forward-looking statements. Actual results might be significantly different from the forecasts in the document, depending on various factors. Factors which may affect the actual business results include but are not limited to the economic situation in the geographic areas where Ricoh conducts business, including Japan, the Americas, Europe, Middle East, Africa, China and Asia, market environment, and currency exchange rates.

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