Ricoh Co Ltd gave a press conference on Ricoh Americas Corp's acquisition of IKON Office Solutions Inc from 9:10 pm Aug 27, 2008, in Tokyo (See related article).
Following are the comments made by Ricoh's President and CEO Shiro Kondo and CFO Zenji Miura on the aim of the company's unprecedentedly large-scale acquisition.
• The purposes of the buyout
-to strengthen the sales force in the North American market
IKON counts many of the Fortune 500 companies as its customers.
-to reinforce the service business
IKON is making profits from its business of contracting for all kinds of printing-related activities. And the business scale is large enough to account for 19% of the company's sales.
• The reason for strengthening the service business
Ricoh has been providing merits to its customers through hardware. However, those merits are shrinking every year. In addition, customer needs are changing. They are now asking not only the useful functions of copy machines and multifunction copy machines but also advanced services such as the improvement of workflows and security.
One of the collateral evidences is the sales of our small-size multifunction copy machines that support A4 paper size. They are being used less widely than expected in developed countries, aside from emerging countries. We aim to deeply cultivate the markets in developed countries by the service business.
We will never give up the basic principle of manufacturing industry – making hardware with great care. On that premise, we want to be a company that provides software services. That's why we will put in resources to reinforce our service business.
• The relationship with Canon
Sixty percent of IKON's sales are coming from Canon Inc's products, and our products account for about 30% of the sales. We do not think that the percentage of Canon will continue to stay at that level, but we will try to keep it. For that purpose, we have to prevent IKON's top executives and customers from falling away.
• The earnings estimate
Our annual sales will increase by about ¥400 billion (US$3,669 million). In respect to the operating profit, we do not expect that IKON will turn a profit soon after it becomes part of the Ricoh Group because there will be an opportunity loss. But, for the future, we want to double IKON's operating profit posted in September 2007 to achieve an operating profit margin of 10%.
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