Japan's Ricoh to axe 10,000 jobs in restructuring

Markets Reuters

By Mayumi Negishi

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TOKYO (Reuters) - Japanese copier and printer maker Ricoh Co <7752.T> will cut nearly 10 percent of its workforce to try to boost sagging profits and fend off competition from firms such as Xerox <XRX.N> and Canon Inc <7751.T>.

Ricoh said the restructuring included slashing 10,000 out of 109,000 global jobs and a consolidation of factories. The move could signal another wave of cost-cutting by Japanese companies in the wake of the devastating earthquake and tsunami on March 11.

Last month, Panasonic Corp <6752.T> said it would cut 17,000 jobs and close up to 70 factories globally. Camera and medical equipment producer Olympus <7731.T> has also said it would shed jobs.

Shares of Ricoh surged 7.2 percent on the news, which analysts said marked a welcome change in direction for a company that has until now refrained from major restructuring, despite lagging rivals in terms of profitability.

"Ricoh has been dragging its feet on restructuring and has finally started moving. The market has been worried how it would deal with its bloated cost structure after acquisitions," said Kazuyuki Terao, chief investment officer at RCM Japan.

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"There are more companies out there that need to carry out restructuring. Some successfully engineered a recovery by restructuring after the Lehman shock. I expect those that did not restructure then will do so this time around."

Ricoh said in a statement the job cuts were expected to boost operating profit by 140 billion yen ($1.7 billion) over the next three years.

The firm said it was aiming for operating profit of 210 billion yen in the financial year to March 2014, more than triple the 60 billion yen it posted in the past year, ending in March, when sales slumped 4 percent to 1.94 trillion yen.

With an operating profit margin of 3 percent in the past business year, Ricoh is less efficient than its Japanese rivals. Konica Minolta <4902.T> had a margin of 5 percent while Canon managed a profit margin of 10 percent.

"We have become a big company and need to re-engineer our corporate structure throughout to become more muscular," Ricoh President and CEO Shiro Kondo told a news conference.

"We have done very little pruning of unprofitable businesses, and we need to pull out of some."

Ricoh said last month it expects its operating profit to rise 16 percent to 70 billion yen in the business year that started in April on sales of 2.09 trillion yen, up 7.6 percent.

(Additional reporting by James Topham and Taiga Uranaka in TOKYO and Maneesha Tiwari in BANGALORE; Editing by Nathan Layne and Anshuman Daga)

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