Ricoh: long-term performance & turning pointsSales (revenue) and profit-margin ratio
Sales (¥ bn)Net margin (%)
1936From sensitized paper and cameras to a copier manufacturer
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY1959 · unconsolidated
Revenue$9M
Net income$444K
Net margin4.9%
→
FY1976 · unconsolidated
Revenue$382M
Net income$8M
Net margin2%
1936RIKEN's sensitized-paper department is separated as Riken Kankoshi
1938Renamed Riken Optical Industries; camera manufacturing begins
1949Shares listed on the Tokyo Stock Exchange
1950The Ricohflex twin-lens reflex camera goes on sale
1955The Ricopy 101 diazo copier is developed
1959Ricoh Fax, Japan's first domestically made electronic copier
1961Listed on the First Section of the Tokyo and Osaka exchanges
1962Ricoh of America established
1963The company name is changed to Ricoh
1965Dividend suspended; bad assets written off in a single stroke
1968Founder Ichimura Kiyoshi dies at sixty-eight
1971Awarded the Deming Application Prize; Ricoh Nederland established
1973Ricoh Electronics established
Ricoh did not begin as a start-up but as a division cut loose: in February 1936 the Riken konzern spun off its sensitized-paper department and handed the whole of it to Ichimura Kiyoshi, an outsider who had come from selling life insurance and who had smashed a production machine with a hammer in a quarrel with the old hands. What he built on that footing was not one business but a chain of them — sensitized paper, then cameras, then the desktop copier — each borrowing the technology of the last and each sold hard, a habit of switching applications that would define the company long after his death.
An unusual starting point: separation from the Riken konzern
What the newly separated sensitized-paper department handled was Riken positive-image sensitized paper, invented at RIKEN — the Institute of Physical and Chemical Research — and patented at the time in Japan, Germany, the United States and Canada; the rights to manufacture and sell it were held by Rikagaku Kogyo, the core company of the Riken konzern, which was dissolved in August 1941. Ichimura Kiyoshi (市村清) came from Saga Prefecture, and it was his record as a life-insurance salesman at Fukoku Mutual Life that won him promotion to head of the Riken konzern's sensitized-paper department — an unusual career for a company chief. The long-serving staff resented the outsider brought in over them fiercely, and the conflict escalated to the extreme point where Ichimura himself destroyed a sensitized-paper production machine with a hammer. Okochi Masatoshi (大河内正敏), the head of the Riken konzern, did not discipline him. In February 1936 he separated the sensitized-paper department instead, establishing Riken Kankoshi Co. with capital of ¥350,000 and thirty-three employees, taking the chairmanship himself and entrusting the whole of the management to Ichimura. The separation has been handed down ever since as an episode demonstrating Okochi's judgement of men.
Once independent, Ichimura put the sensitized-paper business on a sound footing, and in 1938 renamed the company Riken Optical Industries and moved into camera manufacturing. Under wartime conditions camera production was almost entirely halted and the optical division switched to making binoculars for the military. After the war the company lost its overseas plants, but its main domestic facilities came through the bombing largely unscathed, and sensitized paper grew steadily once controls were lifted. The Ricohflex, launched in 1950, was exported at 10,000 units a month on the Korean War procurement boom, and the company came to be spoken of alongside Sony and Honda as one of the three stars of postwar Japan. The Ricopy 101 desktop copier, launched in 1955, applied the company's sensitized-paper technology and stands as the machine that marked its full entry into the office-equipment market. An industry journal of the day judged that the company was developing through a shift from a camera focus to an all-round office-equipment maker; with Ricopy at the centre, expectations for new products are limitless (Shin Nihon Keizai, 1950). Ichimura's style of management — never clinging to one product category, moving resources nimbly into the next growth field — formed the character of the company.
The <q>god of management</q>, complacency, and rebuilding from a suspended dividend
In the first half of the 1960s Ricoh grew under Ichimura Kiyoshi, hailed as the god of management, but the complacency that tends to settle on a successful firm spread through the organisation. In 1962 Jitsugyo no Sekai wrote that Riken Optical's management has various distinguishing features, and one of them is diversification — and it took the lead on the trend of the times, a model case that has succeeded to an exceptional degree (Jitsugyo no Sekai, Sep 1962). The recession that followed the 1964 Tokyo Olympics worsened the company's position, however, and in the year to March 1965 it wrote off $2.3M (¥840m) of bad assets in a single stroke, suspended its dividend and faced its first serious crisis of the postwar period. Writing on the reconstruction of the watch business the following year, Keizai Tenbo reported that Ichimura Kiyoshi, once celebrated as the very god of management, has at last gone to the banks in tears, asking for a blanket deferral of interest (Keizai Tenbo, 1 Oct 1967). A rationalisation that seconded 800 of the company's 4,000 staff to affiliated companies mapped out the route back, and set the pattern — written off in one lump — for dealing with the burdens of the past that would recur thereafter.
What turned the rebuilding around was the Electronic Ricopy BS2, an electrostatic copier launched in 1965. Society's demand for office rationalisation and the timing of the product coincided, and the dividend was restored in only two and a half years. Diamond recorded the process by which the copier replaced the camera as the face of the company: the success of Ricopy far surpassed that of the Ricohflex. And so the name of Ricoh became known everywhere (Diamond, 26 Aug 1963). Ichimura died suddenly in 1968 at the age of sixty-eight, but the method he had led — the continuous conversion of the business from sensitized paper to cameras and from cameras to copiers — was engraved into the organisation as a way of working: commercialise an existing technology in a new field of application, and take share with selling power. The market instinct and the sales discipline he had built up in his years as an insurance salesman ran consistently beneath the management of the company, and became the foundation of the Ricoh that sells.
1977From standard-bearer of office automation to a third crisis
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY1977 · unconsolidated
Revenue$546M
Net income$17M
Net margin3.1%
→
FY2016 · consolidated
Revenue$20.3B
Net income$579M
Net margin2.9%
1977Ricoh proposes the OA concept at the Hanover Messe
1978A merit system open from age thirty-five is introduced
1980Own-brand exports begin
1983Hamada Hiroshi becomes president at forty-nine
1987The Imagio 320, the first digital copier, goes on sale
1991The CRP restructuring programme is announced
1994The The Man scheme is created
1995Savin and Gestetner acquired; Gestetner Holdings follows in September
1996Sakurai Masamitsu becomes president
2001Lanier Worldwide acquired
2004Hitachi Printing Solutions acquired
2008IKON Office Solutions acquired
2010Ricoh Japan formed by merging seven domestic sales companies
2011The Pentax business is bought from Hoya
For four decades Ricoh rode a single machine and a single method: the plain-paper copier, sold door to door through a distribution net three layers deep and then billed for service and supplies until the next one replaced it. The method carried ordinary profit to $158.7M (¥22bn) in the year to March 1989 and made Ricoh the name in Japanese offices — and it was the same method, and the confidence it bred, that left the company slow into digital, slow into colour, and finally the buyer of an American distributor it could not make work.
The three-layer sales net behind the peak profits of the <q>Ricoh that sells</q>
In 1977, at the Hanover Messe in Germany, Ricoh put forward the world's first concept of OA — office automation — and set its international standing as an office-equipment maker in order. President Oue Takeshi (大植武士) introduced a merit system open from the age of thirty-five in 1978, and from 1980 pushed the company's own-brand expansion into the European and American markets in earnest. His successor Hamada Hiroshi (浜田広) took the presidency at forty-nine, holding to a philosophy of deliberately raising subordinates whom their superiors would find difficult to use. Back when he was manager of the copier section, Hamada described the company's strengths this way: Ricoh's strength lies first in its original technology, and in a sales network laid down across the whole country that has no equal for sheer power. This is the Ricoh of a wide, high-quality sales network, on which ten years of money and labour were staked (Hamada Hiroshi interview). The three-layer structure — roughly 7,000 salesmen nationwide, the directly affiliated sales companies together with office-equipment specialist traders such as Otsuka Shokai, and the stationery wholesalers — supported door-to-door calling on small and medium-sized firms and built the company a position of its own in the industry.
The expansion of the plain-paper copier market and the three-layer sales net meshed, and ordinary profit for the year to March 1989 reached $158.7M (¥22bn). An after-sales revenue model, combining the maintenance-service fees and the continuing income from consumables that came with a growing installed base, pushed profit up. Diamond recorded how the company had come to enter the PPC market in earnest: whether it was that the timing was right, or that Ricoh had entered in earnest, is not clear either way; but from about this period PPC became a boom and grew into a large expanding field. Riding that current and making use of the selling power it had always had, Ricoh was to grow its PPC business substantially (Diamond, 29 Oct 1977). The business model, running on the two wheels of selling power and recurring billing, was complete enough to be called a forerunner of the subscription models of later years, and it settled the company's position in the office-equipment market. Yet that very experience of success also became the source of the inertia that would later slow its conversion to digital.
From the CRP restructuring to the failure of the IKON acquisition
In 1987 Ricoh launched the Imagio 320, the industry's first digital copier, but constraints such as its inability to receive a fax while copying told against it, and for some six years from launch it struggled. As early as 1980 Nikkei Business had sounded a warning: with its powerful sales network running at full tilt, Ricoh has held the position of top company by PPC units sold and earned high profits. Recently, however, it has been pushed by rivals on the sales side. It was late to export PPCs under its own brand, and management that depends on selling power has reached a turning point (Nikkei Business, 14 Jul 1980). Diversification dispersed resources into personal computers and LAN businesses, and in the year to March 1992 the company posted an operating loss of $13.4M (¥2bn), its first since listing. In November 1991 President Hamada Hiroshi announced the CRP restructuring programme, targeting cost reductions of about $292.1M (¥37bn), and set about a reform in which twenty-three directors were asked to submit their resignations. Its lateness in colour had been pointed out: Ricoh's colour machine launch slipped as far back as the end of 1983 (Nikkei Business, 7 Nov 1991).
The introduction of TSS, an integrated design-and-production method, compressed development costs to a quarter and development time by half, and the company declared a return to its core businesses of copiers and facsimile machines. Operating profit for the year to March 1995 recovered to $196.7M (¥19bn) — a turn of management that shifted the diversification line from a geocentric to a heliocentric view. Sakurai Masamitsu (桜井正光), who took office in 1996, roughly doubled consolidated revenue over eleven years in the post to $17.6B (¥2.07tn), widening the overseas sales network with Savin and Gestetner in 1995, Lanier in 2001 and Hitachi Printing Solutions in 2004. Sakurai put it this way: when the digital age comes, copiers and printers, faxes, cameras and personal computers will all connect, and products with entirely new functions become possible. Ricoh was quick to see that (Nikkei Business, 22 Dec 1997). Kondo Shiro (近藤史朗) acquired IKON Office Solutions, a major North American office-equipment distributor, in October 2008 for $1.8B (¥171bn), but the timing coincided with the immediate aftermath of the Lehman shock and integration proved difficult. The tacit knowledge of the three-layer structure that had sustained the Ricoh that sells could not be transferred to an acquired company overseas, and became the precondition for the writedown ten years later.
2017A third reckoning with the past, and redefinition as a digital services company
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY2017 · consolidated
Revenue$18.1B
Net income$31M
Net margin0.2%
→
FY2023 · consolidated
Revenue$15.2B
Net income$387M
Net margin2.5%
2017Yamashita Yoshinori becomes president and launches the Ricoh reboot
2018Impairment losses of ¥175.9bn on IKON and others taken in one charge
2018Withdrawal from non-core businesses
2019Operating profit recovers to ¥86.8bn
2021A buyback of up to ¥100bn, some 20 per cent of shares, under a 50 per cent total-return policy
2022PFU acquired from Fujitsu for ¥84bn
2023Oyama Akira succeeds Yamashita as president
2024Etria, the joint venture with Toshiba Tec, is established
The third crisis was the largest. In the year to March 2018 Ricoh wrote off $1.6B (¥176bn), mostly against IKON, and closed the year with an operating loss of $1.0B (¥116bn) — the deepest in more than eighty years of trading. What followed was not another hit product, which is how the company had escaped 1965 and 1991, but an attempt to change what Ricoh sells: contracts rather than machines, bought in from outside through PFU and a joint venture with Toshiba Tec.
A ¥175.9bn writedown and Yamashita Yoshinori's <q>Ricoh reboot</q>
Yamashita Yoshinori (山下良則), who took office as president in April 2017, raised the banner of a Ricoh reboot and declared a wholesale review of five long-standing principles that had until then been treated as fundamental to the company — the pursuit of market share, the full line-up, in-house manufacturing and the rest. An industry weekly of the same period described how, riding the wave of digitisation and colour in multifunction printers, Ricoh had expanded its office-equipment sales from the 1990s until the Lehman shock on a sales force known as Ricoh of the wild warriors; but after Lehman the move to review office-equipment costs spread widely, revenue plateaued, and the personnel costs that had risen with the expansion of the sales network became a weight — a structure that announced the limits of a dependence on office equipment. In the year to March 2018 the company recognised impairment losses of $1.6B (¥176bn), centred on IKON and mindSHIFT, closing with an operating loss of $1.0B (¥116bn) and a net loss of $1.2B (¥135bn) — the largest deficit in the eighty-odd years since its founding. It was the third reckoning with the burdens of the past, following the $2.3M (¥840m) write-off of bad assets in 1965 and the CRP of 1991, and its scale exceeded both.
Yamashita sold off non-core businesses one after another, among them Ricoh Electronic Devices and Ricoh Logistics, and tidied up the business portfolio. In the following year to March 2019 operating profit recovered to $796.3M (¥87bn), showing the pattern by which all three crises were carried through immediately after a change of chief executive. Yamashita put a business reorganisation that protected employment at the front of what he was doing. Ricoh's three management crises and the recoveries from them will remain in business history as a case that goes beyond the success or failure of individual decisions, showing the difficulty of transformation in a mature market and the structural weight of a change of chief executive as an event. The question that kept being asked was how quickly a company can recognise and break the cycle in which the very strength of its core business generates the organisational inertia that becomes the seed of a crisis.
Structural conversion into a digital services company
After the writedown, Ricoh placed conversion into a digital services company at the centre of its management. In September 2022 it acquired 80 per cent of the shares of PFU, a Fujitsu subsidiary, for $597.8M (¥84bn), taking in the scanner business; and in July 2024 it established Etria, a joint venture with Toshiba Tec, and set about reorganising the office printing business. Recasting the growth indicator as the number of digital-service contracts rather than the number of copiers sold amounts to a break with a hardware sales model that had run for ninety years. Changing how a company defines itself as a manufacturer is not easy while maturity advances across the industry as a whole, and it became a transformation that also demanded a long time on the ground of day-to-day operations. In April 2023 Yamashita passed the presidency to Oyama Akira (大山晃), in the sense of entrusting his successor with the break from a dependence on multifunction printers.
Consolidated revenue for the year to March 2024 was $15.5B (¥2.35tn) and operating profit $409.2M (¥62bn), so that the recovery after the writedown showed in the figures as well. For a Ricoh that had come through all three of its management crises by putting a hit product into the market, the conversion to digital services is an attempt to get beyond the very learning that had soaked into the organisation — that it can recover if the next hit product appears. The focus is on how to redefine, within the new forms of value delivery that are solutions and subscriptions, the traditional strength that has worked through ninety years of history: the ability to commercialise as a second mover. This is the task set before the management team, as the next stage of the continuous conversion that has run on from Ichimura Kiyoshi's separation and independence. The outline of the next medium-term management strategy is scheduled to be presented in March 2026, and the level to which the ratio of contract-stock business is to be raised will be the measure of whether the conversion succeeds.
The turning points, read in full: what was at stake, what was chosen and what the revenue did around it. The Japanese edition is the edition of record and carries the sourced dossier behind each decision — background, options weighed, outcome — linked under every decision.
Key decision · 1936
Spinning off Riken Kankoshi and entrusting it entirely to Ichimura Kiyoshi (1936)
Putting a man the organisation cannot hold into a company of his own
The core of this decision can be seen in the fact that it answered the question of how to treat an outstanding salesman by giving him a company of his own. Rather than force Ichimura — violent enough to destroy a machine — back inside the organisation, Okochi cut the business out whole and handed the whole of it over. It was a course open to him only because of the constitution of the Riken konzern, which set out to industrialise inventions and had long run its affiliated companies on independent accounts; and one can see in it a distinctive pattern of founding a company, different both from separation out of a zaibatsu proper and from the re-division of wartime amalgamations.
Even so, entrusting everything to an outsider was something that only came to stand after passing through friction with the long-serving staff and isolation at head office. Incorporation did not resolve everything, and Ichimura went on to clash with Okochi repeatedly afterwards. Still, it was from this choice — deliberately making an individual who would not fit inside the organisation independent, and handing him the discretion to face the market — that the conversions of Ricoh began, running from sensitized paper to cameras and on to copiers. Whether you fit the person to the organisation, or prepare the shape of the company to fit the person: the separation of 1936 is one instance of that question being embodied at an early date.
Full entry into the office-equipment market with the Ricopy 101 (1955)
From materials to machines: seizing the demand next door
The core of this decision can be seen not in opening up a market with a wholly new technology, but in finding the next line of business — machines — right next to the materials and the customers the company already held. Because sensitized paper had brought it into contact with the places where copying was actually done, and because it had grasped at first hand what those places wanted, it could calculate the odds of stepping into the copier as a machine. The social movement towards office rationalisation certainly pushed at its back; but the character of this entry is visible in the way it read the movement first and shifted resources into the field next door.
The launch of Ricopy was not, however, plain sailing: it took several years for demand to grow, and there was competition from rivals following behind. Even so, the copier replaced the mainstay of the company, and the method of changing horses — sensitized paper, cameras, copiers — was handed on to the Ricoh that followed. How to make use of the strength of holding the materials in the market for the machines next to them: in placing that question at the centre of the business at an early date, the entry with the Ricopy 101 can be called the step that settled the character of the company.
Buying Pentax from Hoya and rebuilding the founding camera business (2011)
Choosing to take a small founding business back into its arms
Measured by the size of the sum, this was not a large deal. It combined the twelfth- and eleventh-placed makers in the industry, and even added together their annual unit sales came to only about two million, which left their position in the rear group unchanged. That Ricoh went through with the decision nonetheless appears to have been because cameras had been the founding business since 1936, and were recognised as a business it could not let go of in establishing itself with consumers. The character of the decision is visible in the fact that a small business, one that measured on efficiency alone might have been exited or shrunk, was deliberately supplemented from outside and taken back into its arms.
The markets for digital single-lens and compact cameras did, however, turn rapidly towards contraction thereafter with the spread of the smartphone. The environment kept changing in ways that make it hard to say the growth scenario President Kondo had drawn — $944.8M (¥100bn) in three years — was realised as originally envisaged. Even so, Ricoh kept the camera business in hand through the change of company name, and preserved the flame of the founding business. The question of how to keep positioning a small founding business in the face of a market headwind can be seen trailing a long way beyond this acquisition.
A large buyback after Effissimo changed its holding purpose, and the turn to capital efficiency (2021)
How the tension over capital efficiency remains
At the core of this sequence of moves lies the fact that the company kept being asked about the weight of the shareholders' equity it had accumulated, while the earning power of the business had not fully recovered. Against an activist shareholder pressing on a depressed share price and low capital efficiency, Ricoh responded with a large buyback and a rise in its total-return ratio, bringing the way it used capital closer to the market's line of sight. In the way the arguments of the side making the demands and the side receiving them converged, one can see a pattern for how companies have dealt with activists in recent years. Even so, the fact that it went through with a buyback of about 20 per cent of its shares while the year to March 2021 sank into an operating loss still leaves open the question of how to reconcile rebuilding the business with returning capital.
The course by which the buyback shrank the denominator and, if anything, pushed Effissimo's shareholding ratio up shows that returning capital does not necessarily bring a relationship with an activist shareholder to a close. With a shareholder holding about 20 per cent of the stock continuing to have a voice in management, how far the company can keep the initiative over its capital policy is hard to foresee. The task of the core business — the conversion to digital services — and the task of the capital market — dialogue with shareholders — are still placed on the same set of scales. The tug of war between the two appears, as of this writing, to remain undecided.
This English edition follows the Japanese one chapter by chapter. The Japanese edition remains the edition of record: it carries the source-by-source citations, the financial tables and the shareholder and executive records. 日本語版（詳細）— Ricoh full history in Japanese →
Shin Nihon Keizai — 新日本経済: 1950; Nov 1955, Riken Optical Industries: a look at the Omori plant.
Jitsugyo no Sekai — 実業の世界 (Mita Shogyo Kenkyukai), Sep 1962, An excellent company: Riken Optical Industries. NDL Digital Collections.
Diamond — ダイヤモンド (Diamond, Inc.): 26 Aug 1963, Will Ricoh ride the current again?; 29 Oct 1977, Ricoh's strategy for strengthening its weak divisions.
Keizai Tenbo — 経済展望, 1 Oct 1967, Ichimura Kiyoshi, the "god of management", in tears at the bank.
企業の歴史 : 明治百年 (Corporate Histories: A Century of Meiji, Keizai Shunju-sha, 1968), the Ricoh entry.
Nikkei Business — 日経ビジネス: 14 Jul 1980, Ricoh — rivals closing fast, management dependent on selling power at a turning point; 7 Nov 1991, A study in miscalculation: Ricoh; 22 Dec 1997, the editor-in-chief's interview with Sakurai Masamitsu.
Shukan Toyo Keizai — 週刊東洋経済 (Toyo Keizai Inc.), 29 Apr 2017, The limits of office-equipment dependence: the blind alley of a distinguished Ricoh.
Interview with Hamada Hiroshi, then manager of the copier section in Ricoh's head-office sales administration department and later president of Ricoh.