November 2, 2017
The Japanese OEM’s half year figures have been overshadowed by the hit to its non-consolidated accounts.
Ricoh Company Ltd.’s release of its quarterly report this week was quickly followed by an unexpected announcement of extraordinary losses in its non-consolidated financial accounts.
The announcement comes after the Japanese OEM were issued with a Letter of Credit (L/C) by banks in Japan to underwrite the debt of Ricoh India Ltd., Ricoh’s New Delhi-based subsidiary, to local Indian banks. The L/C gave the Japanese banks the power the right to request compensation from Ricoh should one of the Indian banks call in the debt.
As a result of one of the Indian banks calling on the L/C, the Japanese bank has asked for compensation from Ricoh; the OEM therefore has allocated ¥23.1bn ($202.4m/€173.6m), the full amount of the L/C, as extraordinary losses, which when reclaimed from Ricoh India will move from reserves to guaranteed losses.
The announcement sullies slightly an otherwise positive set of results for Ricoh: For the half year ended 30 September 2017, domestic sales were up 5.6 percent to ¥385bn ($3.4bn/€2.9bn), compared to the equivalent period last year. Overseas sales also increased, by 1.2 percent, to ¥613bn ($5.4bn/€4.6bn).
There was also a huge rise in operating profit, rising from ¥16.5bn ($144.5m/€124m) to ¥22bn ($192.7m/€165.3m), a climb of 33 percent, while gross profit went up 0.8 percent from ¥387.2bn ($3.4bn/€2.9bn) to ¥390.4bn ($3.42bn/€2.93bn).
Ricoh simultaneously published its forecast for the year ending 31 March 2018, which presented mixed fortunes for the OEM. Whilst domestic sales are predicted to rise 4.2 percent to ¥800bn ($7bn/€6bn), pre-tax profits are forecast to tumble dramatically, falling 86.6 percent to just ¥4bn ($35m/€30m).
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