RICOH COMPANY,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.22T
• Operating Income: ¥35.45B
• Net Income: ¥25.72B
• EPS: ¥43.18

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Ricoh (7752) reported FY2026 Q2 consolidated IFRS results showing modest top-line growth with a sharp rebound in profitability. Revenue rose 1.7% YoY to 12,224.51, while operating income surged 420.6% YoY to 354.48, lifting the operating margin to 2.9%. Gross profit reached 4,232.84, implying a gross margin of 34.6%, while SG&A expenses were 4,189.57 (34.3% of revenue), indicating that cost discipline and mix improvements were the primary drivers of the profit recovery. Net income was 245.77, up 165.2% YoY, with an effective tax rate of 10.2%, and total comprehensive income expanded to 581.67, suggesting sizable positive other comprehensive income items (likely FX translation and/or valuation gains). DuPont analysis indicates a net margin of 2.0%, asset turnover of 0.509x, and financial leverage of 2.18x, yielding a calculated ROE of 2.2% that matches the reported figure. ROA is approximately 1.0% on period-end assets, evidencing still-low capital efficiency even after the profit rebound. Operating cash flow was strong at 522.06, more than 2x net income (OCF/NI = 2.12x), and free cash flow was positive at 249.16, reflecting prudent capex at -221.70 and controlled investing outflows. The balance sheet remains sound with total assets of 24,032.56, liabilities of 13,023.68, and equity of 11,002.17, for an equity ratio of 44.8% and liabilities-to-equity of 1.18x. Liquidity metrics such as current ratio and quick ratio are not calculable due to unreported current liabilities; however, receivables of 5,411.32 and inventories of 2,989.00 point to ongoing working capital intensity typical for the business. Cash and equivalents stood at 1,906.57 after net cash inflow across operations and financing. Shareholder returns were active, with dividends paid of 108.57 and share repurchases of 224.61; buybacks exceeded FCF, implying draw on cash or other sources. The calculated payout ratio is 88.1% and FCF coverage is 1.15x, suggesting dividend capacity is supported but not abundant if earnings or cash generation soften. Profitability is improving, but margins remain thin and below high-quality peer benchmarks, leaving limited buffer against macro or FX shocks. The services transition and cost optimization efforts appear to be gaining traction, but sustainability will hinge on continued mix shift and operational efficiency. Data limitations (several items unreported) constrain precision on liquidity and leverage granularity, but the overall quality of results is improving with healthier cash conversion and resilient equity capitalization.

Profitability Analysis

ROE decomposition: Net profit margin 2.0% × asset turnover 0.509 × financial leverage 2.18x = ROE 2.2% (aligned with reported). Operating margin is 2.9% (354.48 / 12,224.51), up sharply YoY given the >4x increase in operating income versus low single-digit revenue growth, indicating strong operating leverage from SG&A control and better gross spread. Gross margin at 34.6% versus SG&A ratio of 34.3% leaves a narrow operating spread; improvements likely stem from pricing, product/service mix, and cost reductions rather than volume. The low effective tax rate (10.2%) aided net margin, though sustainability of this rate is uncertain. ROA approximates 1.0% (245.77 / 24,032.56), reflecting still modest capital efficiency. Equity method income of 37.07 contributed to pre-tax profit, slightly enhancing margin quality. Overall margin quality is improving but remains thin, with sensitivity to cost inflation and FX. Operating leverage appears high: +1.7% revenue translated into +420.6% operating income, implying substantial fixed-cost absorption and/or cost base reset.

Growth Assessment

Revenue grew 1.7% YoY to 12,224.51, indicative of steady demand in core office-related businesses and services. The profit recovery is outsized relative to revenue growth, suggesting self-help measures (pricing, cost reductions, mix shift) rather than broad-based volume expansion. Net income rose 165.2% to 245.77, underpinned by improved operations and a low tax rate, while comprehensive income jumped to 581.67, likely aided by FX translation or valuation effects. Sustainability of earnings growth will depend on maintaining gross margin and SG&A discipline as well as continued transition toward higher-margin digital services and managed solutions. With inventories at 2,989.00 and receivables at 5,411.32, working capital management remains key to sustaining free cash flow as growth normalizes. Given thin operating margins, incremental revenue growth should still provide leverage, but the base remains susceptible to macro softness in office demand and contract renewal cycles. Outlook: cautious improvement if cost and mix tailwinds persist; FX swings and input costs remain watch points. Data constraints (no segment details or R&D disclosure) limit deeper attribution of the growth drivers.

Financial Health

Total assets 24,032.56 and total equity 11,002.17 yield an equity ratio of 44.8%, indicating a solid capitalization level. Total liabilities are 13,023.68, resulting in a liabilities-to-equity ratio of 1.18x. Current assets of 12,134.49 provide ample asset-side liquidity, but current liabilities were unreported, preventing calculation of current and quick ratios. Cash and equivalents are 1,906.57, offering liquidity to fund operations and near-term commitments. Accounts receivable of 5,411.32 exceed accounts payable of 3,326.99, reflecting a cash conversion cycle typical for the sector and highlighting the importance of receivables collection. Interest-bearing debt details and interest expense are unreported, so leverage by net debt and interest coverage cannot be assessed. Balance sheet quality appears adequate with meaningful equity cushion, but opacity on debt tenor and covenants is a limitation.

Cash Flow Quality

Operating cash flow was 522.06, 2.12x net income, signifying strong cash conversion and limited non-cash earnings inflation. Free cash flow was 249.16, calculated as OCF plus investing CF (-272.90), indicating positive residual cash after investment needs. Capex of -221.70 represents the bulk of investing outflows, implying disciplined capital spending consistent with a services-tilt strategy. Working capital appears to have supported cash generation given the high OCF relative to NI, though exact drivers (AR, AP, inventory changes) are not disclosed. Financing CF of 67.02 reflects active capital return, with dividends (-108.57) and buybacks (-224.61) more than offset by other financing inflows. The gap between FCF and total shareholder returns suggests dependence on cash balances or incremental financing to fund buybacks in the period. Overall earnings quality is good given the OCF/NI ratio, but sustainability depends on maintaining receivables collection and inventory discipline.

Dividend Sustainability

The calculated payout ratio is 88.1%, which appears high relative to net income and suggests a sizable commitment to shareholder returns; methodology differences may apply given data limitations. FCF coverage is 1.15x, indicating dividends were modestly covered by free cash flow. Dividends paid were 108.57 versus FCF of 249.16, while additional share repurchases of 224.61 exceeded FCF, implying that total shareholder returns surpassed internally generated cash. With an equity ratio of 44.8% and positive OCF, the balance sheet can support dividends in the near term, but prudence is warranted if earnings growth stalls or cash conversion weakens. Absence of disclosed DPS and policy guidance limits precision; monitor full-year guidance, payout policy language, and alignment with medium-term profit and FCF targets.

Risk Assessment

Business Risks:

• Structural decline in office printing volumes impacting equipment and supplies demand
• Execution risk in transitioning to higher-margin digital services and solutions
• Pricing pressure from competitors across hardware and managed services
• FX volatility affecting overseas revenue translation and cost base
• Supply chain and component availability/cost fluctuations
• Customer IT budget constraints and macro slowdown affecting renewals and project pipelines

Financial Risks:

• Limited visibility on interest-bearing debt and interest coverage due to unreported items
• Working capital intensity with large receivables and inventories impacting cash cycles
• Thin operating margin (2.9%) leaving limited buffer for cost inflation
• Shareholder returns (dividends/buybacks) exceeding FCF in the period, implying reliance on cash or financing
• Potential variability in effective tax rate affecting net profitability

Key Concerns:

• Sustainability of margin gains given modest top-line growth
• Dependence on cost control and mix shift rather than robust volume growth
• Data gaps (current liabilities, interest expense, DPS) limit full assessment of liquidity and leverage

Investment Implications

Key Takeaways:

• Profit rebound with operating margin at 2.9% on modest +1.7% revenue growth signals effective cost/mix actions
• ROE at 2.2% remains low, highlighting room for further efficiency and profitability improvements
• Strong cash conversion (OCF/NI 2.12x) underpins positive FCF of 249.16
• Equity ratio of 44.8% indicates a solid balance sheet despite missing debt detail
• Shareholder returns were elevated; buybacks exceeded FCF, reducing financial flexibility if replicated
• Comprehensive income substantially exceeded net income, suggesting FX/OCI tailwinds this period

Metrics to Watch:

• Operating margin and gross-to-SG&A spread
• OCF/NI ratio and FCF after capex
• Receivables and inventory levels (days sales outstanding and inventory days)
• Revenue mix toward services and recurring contracts
• FX impacts and effective tax rate sustainability
• Capital allocation split across dividends, buybacks, and growth capex

Relative Positioning: Within the imaging and office solutions peer group, Ricoh shows improving profitability and cash conversion but still operates with thinner margins and lower ROE than best-in-class peers; balance sheet strength is a support while continued services mix shift is key to closing the profitability gap.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
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