BEIJING, Aug. 14, 2009 (GLOBE NEWSWIRE) -- Fuwei Films (Holdings) Co. Ltd. (Nasdaq:FFHL) ("Fuwei" or the "Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced the unaudited financial results for the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights
* Revenues were RMB 72.6 million (US$10.6 million), compared with RMB 124.7 million in the same period of 2008 and RMB 74.5 million in the first quarter of 2009 * Gross margin was 8.6%, compared with 17.6% in the same period of 2008, but improved from 0.10% in the first quarter of 2009 * Net loss was RMB 7.4 million (US$1.1 million), compared with a net income of RMB 9.7 million in the same period of 2008, but narrowed from a net loss of RMB 14.1 million in the first quarter of 2009 * Diluted net loss per share was RMB 0.56 (US$0.08), compared with diluted EPS of RMB 0.74 in the same period of 2008, but narrowed from a diluted net loss per share of RMB 1.08 in the first quarter of 2009 * Net cash inflow from operations was RMB 12.3 million (US$1.8 million), compared with net cash inflow of RMB 5.6 million in the same period of 2008 * Cash on hand at June 30, 2009 was RMB 16.0 million (US$2.3 million), an increase from RMB 15.8 million at December 31, 2008
"As we predicted, the market for consumer packaging BOPET films bottomed out in the first quarter, and our financial results started to come back in the June quarter," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "During the first half of this year, we significantly cut back on operating costs, and our operating income became positive again. We also improved our cash flow through the reduction of accounts receivable and inventories. Because of the immediate actions taken by the management, our net loss per share was significantly lower than the previous two quarters."
Mr. He continued, "Going forward, we are encouraged by the re-acceleration of Chinese GDP growth and the tangible signs of a leveling-out of the U.S. economy. We will be closely monitoring consumer spending in China, which has seen healthy growth in the recent months, while at the same time continuing to monitor the effect of crude oil prices on our operations. Lastly, we believe if we increase our efforts to obtain funding for our third production line for thick film, which has application in electronic and solar industries, we will stand a better chance of enhancing our leadership position in the Chinese BOPET film industry."
Second Quarter 2009 Results
Revenues were RMB 72.6 million (US$10.6 million), compared with RMB 124.7 million in the second quarter of 2008 and RMB 74.5 million in the first quarter of 2009. The decrease in overall revenues was primarily because of shrinking demand especially for specialty films as a result of global economic crisis.
Sales of specialty films in the second quarter of 2009 were RMB 6.5 million (US$1.0 million), or 9.0% of total revenues, compared with RMB 41.1 million, or 33.0% of total revenues, in the same period of 2008, and RMB 4.1 million, or 5.6% of total revenues, in the first quarter of 2009.
The following is a breakdown of commodity and specialty film sales for the three-month periods ended June 30, 2009 and June 30, 2008 (amounts in thousands):
Three Months Period Three Months Period
------------------- -------------------
Ended Ended
----- -----
June 30, 2009 June 30, 2008
------------- -------------
RMB US$ % of Total RMB % of Total
Printing film 9,503 1,391 13.1% 12,157 9.7%
Stamping film 37,235 5,451 51.3% 24,759 19.8%
Metallization film 8,131 1,190 11.2% 12,844 10.3%
Base film for other
applications 11,182 1,637 15.4% 33,850 27.1%
Special film 6,521 955 9.0% 41,136 33.0%
---------------------------- --------------------
72,571 10,624 100.0% 124,747 100%
============================ ====================
Sales from overseas were RMB 7.9 million (US$1.2 million), or 10.9% of total revenues, compared with RMB 8.0 million, or 6.4% of total revenues, in the second quarter of 2008, and RMB 10.5 million, or 14.1% of total revenues, in the first quarter of 2009.
The following is a breakdown of domestic versus overseas sales for the three-month periods ended June 30, 2009 and June 30, 2008 (amounts in thousands):
Three Months Period Three Months Period
------------------- -------------------
Ended June 30, 2009 Ended June 30, 2008
------------------- -------------------
RMB US$ % of Total RMB % of Total
Sales in China 64,632 9,462 89.1% 116,725 93.6%
Sales in other
countries 7,939 1,162 10.9% 8,022 6.4%
---------------------------- --------------------
72,571 10,624 100.0% 124,747 100.0%
============================ ====================
Gross profit for the second quarter of 2009 was RMB 6.3 million (US$0.9 million), compared with RMB 21.9 million in the same period of 2008, and RMB 73,000 in the first quarter of 2009. Gross margin was 8.6%, compared with 17.6% in the same period of 2008, but a significant improvement from the 0.1% as recorded in the first quarter of 2009. The sequential rebound in gross margin was primarily due to the increase of our sales price, as well as execution of cost and expenditures deduction measures.
Selling, general and administrative (SG&A) expenses were RMB 7.3 million (US$1.1million), compared with RMB 9.0 million in the same period of 2008, or RMB 16.4 million in the first quarter of 2009. SG&A as a percentage of total revenues was 10.1%, compared with 7.2% in the same period of 2008 and 22.0% in the first quarter of 2009. The reduction in SG&A was mainly due to decreased delivery cost and allowances for doubtful accounts receivable.
In the second quarter of 2009, Fuwei turned an operating profit of RMB 1.1 million (US$0.2 million), compared with an operating profit of RMB 12.9 million in the same period of 2008 and an operating loss of RMB 16.3 million in the first quarter of 2009.
Tax benefit was RMB 1.2 million (US$0.2 million), compared with tax expense of RMB 0.9 million in the same period of 2008 and tax benefit of RMB 2.5 million in the first quarter of 2009.
Net loss was RMB 7.4 million (US$1.1 million), compared with net income of RMB 9.7 million in the same period of 2008 and net loss of RMB 14.1 million in the first quarter of 2009.
Diluted net loss per share was RMB 0.56 (US$0.08), compared with diluted earnings per share of RMB 0.74 in the same period of 2008 and diluted net loss per share of RMB 1.08 in the first quarter of 2009.
Six Months Results
For the first six months of 2009, revenues were RMB 147.1 million (US$21.5 million), compared with RMB 228.8 million in the same period of 2008.
Sales of specialty films were RMB 10.7 million (US$1.6 million), or 7.3% of total revenues, compared with RMB 74.9 million, or 32.7% of total revenues, in the same period of 2008.
The following is a breakdown of commodity and specialty film sales for the six-month periods ended June 30, 2009 and June 30, 2008 (amounts in thousands):
Six Months Period Six Months Period
----------------- -----------------
Ended Ended
----- -----
June 30, 2009 June 30, 2008
------------- -------------
RMB US$ % of Total RMB % of Total
Printing film 16,632 2,435 11.3% 31,370 13.7%
Stamping film 68,422 10,017 46.5% 45,969 20.1%
Metallization film 20,403 2,987 13.9% 15,759 6.9%
Base film for other
applications 30,962 4,532 21.0% 60,780 26.6%
Special film 10,669 1,562 7.3% 74,902 32.7%
---------------------------- --------------------
147,088 21,533 100.0% 228,781 100.0%
============================ ====================
Sales from overseas were RMB 18.4 million (US$2.7 million), or 12.5% of total revenues, compared with RMB 31.6 million, or 13.8% of total revenues, in the same period of 2008.
The following is a breakdown of domestic versus overseas sales for the six-month periods ended June 30, 2009 and June 30, 2008 (amounts in thousands):
Six Months Period Six Months Period
----------------- -----------------
Ended June 30, 2009 Ended June 30, 2008
------------------- -------------------
RMB US$ % of Total RMB % of Total
Sales in China 128,666 18,836 87.8% 197,148 86.2%
Sales in other
countries 18,422 2,697 12.5% 31,633 13.8%
---------------------------- --------------------
147,088 21,533 100.0% 228,781 100.0%
============================ ====================
Gross profit for the first six months of 2009 was RMB 6.4 million (US$0.9 million), compared with RMB 43.6 million in the same period of 2008. Gross margin was 4.3%, compared with 19.0% in the same period of 2008.
SG&A was RMB 23.7 million (US$3.5 million), compared with RMB 20.2 million in the same period of 2008.
Tax benefit was RMB 3.7 million (US$0.5 million), compared with tax expense of RMB 1.9 million in the same period of 2008.
Net loss was RMB 21.5 million (US$3.1 million), compared with net income of RMB 17.6 million in the same period of 2008.
Diluted net loss per share was RMB 1.65 (US$0.24), compared with diluted earning per share of RMB 1.35 in the same period of 2008.
Net cash provided by operating activities was RMB 12.3 million (US$1.8 million), compared with RMB 5.6 million in the first six months of 2008.
Cash on hand as of June 30, 2009 was RMB 16.0 million (US$2.3 million), compared with RMB 15.8 million as of December 31, 2008.
Total shareholders' equity was RMB 508.7 million (US$74.5 million), compared with RMB 530.6 million as of December 31, 2008.
As of June 30, 2009, the Company had 13,062,500 basic and diluted total common shares outstanding.
Recent Events
On July 20, 2009, the Company announced that it has received a Memorandum and Order (the "Order") from the U.S. District Court for the Southern District of New York regarding the shareholder class action suit. The Court granted the defendants' motions in part and denied them in part. The Court dismissed plaintiffs' claims to the extent they were based upon Fuwei's alleged failure to disclose the DMT arbitration proceeding. The Court also dismissed certain of plaintiffs' claims to the extent they were brought on behalf of shareholders who did not purchase their shares directly in the IPO. The Court sustained plaintiffs' remaining claims. However, the Court noted that the defendants may be able to assert affirmative defenses provided by the federal securities laws in a motion for summary judgment, which could resolve the case before trial. Now that the motions to dismiss have been ruled upon, the defendants must submit responsive pleadings to the Complaint, and discovery will proceed.
On June 11, 2009, the Company announced that the Chinese central government has raised the export rebate rate for BOPET films from 11% to 13%, effective June 1, 2009. This was the second hike of BOPET film export rebate rates for Chinese manufacturers this year. On March 27, 2009, as part of the economic stimulus for key industries, China increased such rate from 5% to 11%.
Conference Call Information
The Company will host a teleconference on Monday, August 17, 2009, at 8:00 a.m. EDT / 8:00 p.m. Beijing time to discuss the quarterly results. To participate in the call, please dial +1-877-407-9205 in North America, or +1-201-689-8054 internationally, approximately 10 minutes prior to the scheduled start time.
A replay of the call can also be accessed via telephone by calling +1-877-660-6853 in North America, or +1-201-612-7415 internationally, and entering the following access codes: Account #: 286 and Conference ID: 323204. A Web cast replay of the call will also be made and can be accessed on the Fuwei's Website at http://www.fuweiholdings.com.
About Fuwei Films
Fuwei conducts its business through its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"). Fuwei Shandong develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, otherwise known as BOPET film (biaxially oriented polyethylene terephthalate). Fuwei's BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries.
Safe Harbor
This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which, among other things, include both the short and long-term effects of the global financial crisis on the Company and the BOPET film industry; competition in the BOPET film industry; growth of, and risks inherent in, the BOPET film industry in China; uncertainty as to future profitability and our ability to obtain adequate financing for our planned capital expenditure requirements; uncertainty as to our ability to continuously develop new BOPET film products and keep up with changes in BOPET film technology; risks associated with possible defects and errors in our products; uncertainty as to our ability to protect and enforce our intellectual property rights; uncertainty as to our ability to attract and retain qualified executives and personnel; and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in view of the volatility in the prices of petroleum products in recent years. The forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual results of our operations may differ materially from information contained in the forward-looking statements as a result of the risk factors.
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
(amounts in thousands except share and per share value)
June 30, Dec. 31,
2009 2008
---------------------- ----------
(Unaudited)
RMB US$ RMB
ASSETS
Current assets
Cash and cash equivalents 15,957 2,336 15,823
Restricted cash 11,055 1,618 10,411
Accounts and bills receivable, net 23,345 3,418 38,579
Inventories 29,023 4,249 30,589
Advance to suppliers 4,333 634 6,846
Prepayments and other receivables 1,879 275 1,857
Deferred tax assets - current 2,078 304 457
---------------------- ----------
Total current assets 87,670 12,834 104,562
Plant, properties and equipment,
net 331,644 48,552 259,235
Construction in progress 240,455 35,202 319,408
Lease prepayments, net 22,245 3,257 22,507
Advance to suppliers - Long Term 4,318 632 4,308
Goodwill 10,276 1,504 10,276
Deposit 18,808 2,753 17,613
Deferred tax assets - non current 4,112 603 1,995
---------------------- ----------
Total assets 719,528 105,337 739,904
====================== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings 153,179 22,425 164,764
Accounts payables 25,938 3,797 23,301
Advance from customers 12,163 1,781 8,781
Accrued expenses and other payables 4,586 671 7,460
Deferred tax liabilities -- -- --
---------------------- ----------
195,866 28,674 204,305
Long-term loan 15,000 2,196 5,000
---------------------- ----------
Total liabilities 210,866 30,870 209,305
Shareholders' equity
Registered capital(of US$0.129752
par value; 20,000,000 shares
authorized; 13,062,500 issued and
outstanding) 13,323 1,950 13,323
Additional paid-in capital 311,907 45,663 311,907
Statutory reserve 29,338 4,295 29,338
Retained earnings 153,461 22,466 174,970
Cumulative translation adjustment 633 93 1,061
---------------------- ----------
Total shareholders' equity 508,662 74,467 530,599
---------------------- ----------
Total liabilities and shareholders'
equity 719,528 105,337 739,904
====================== ==========
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR
THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2009 AND 2008
(amounts in thousands except share and per share value)
(UNAUDITED)
The Three Months
Periods Ended Jun. 30, Periods
---------------------- Ended Jun.
2009 30, 2008
---- --------
---------------------- ----------
RMB US$ RMB
Net sales 72,571 10,624 124,747
Cost of sales (66,297) (9,706) (102,799)
---------------------- ----------
Gross profit 6,274 919 21,948
---------------------- ----------
Operating expenses
Selling expenses (2,734) (400) (4,300)
Administrative expenses (4,609) (675) (4,705)
---------------------- ----------
Total operating expenses (7,343) (1,075) (9,005)
---------------------- ----------
Operating income/(loss) (1,069) (156) 12,943
---------------------- ----------
Other income/(expense)
- Interest income 41 6 52
- Interest expense (4,119) (603) (4,855)
- Others income, net (3,437) (503) 2,410
---------------------- ----------
Total other income/(expense) (7,515) (1,100) (2,393)
---------------------- ----------
Income/ (loss) before income tax
benefit/(expense) (8,584) (1,257) 10,550
---------------------- ----------
Income tax benefit/(expense) 1,210 177 (896)
---------------------- ----------
Net income/(loss) (7,374) (1,079) 9,655
====================== ==========
Other comprehensive income
- Foreign currency translation
adjustments (416) (61) (453)
---------------------- ----------
Comprehensive income/ (loss) (7,790) (1,141) 9,202
---------------------- ----------
Earnings/ (loss) per share,
Basic and diluted (0.56) (0.08) 0.74
====================== ==========
Weighted average number ordinary
shares, Basic and diluted 13,062,500 13,062,500 13,062,500
====================== ==========
The Six Months
Periods Ended Jun. 30, Periods
---------------------- Ended Jun.
2009 30, 2008
---- --------
---------------------- ----------
RMB US$ RMB
Net sales 147,088 21,533 228,781
Cost of sales (140,741) (20,604) (185,207)
---------------------- ----------
Gross profit 6,347 929 43,573
---------------------- ----------
Operating expenses
Selling expenses (7,631) (1,117) (7,738)
Administrative expenses (16,071) (2,353) (12,429)
---------------------- ----------
Total operating expenses (23,702) (3,470) (20,167)
---------------------- ----------
Operating income/(loss) (17,355) (2,541) 23,406
---------------------- ----------
Other income/(expense)
- Interest income 143 21 68
- Interest expense (4,119) (603) (8,645)
- Others income, net (3,882) (568) 4,651
---------------------- ----------
Total other income/(expense) (7,858) (1,150) (3,926)
---------------------- ----------
Income/ (loss) before income tax
benefit/(expense) (25,213) (3,691) 19,480
---------------------- ----------
Income tax benefit/(expense) 3,704 542 (1,889)
---------------------- ----------
Net income/(loss) (21,510) (3,149) 17,591
====================== ==========
Other comprehensive income
- Foreign currency translation
adjustments (428) (63) 168
---------------------- ----------
Comprehensive income/ (loss) (21,937) (3,212) 17,759
---------------------- ----------
Earnings/ (loss) per share,
Basic and diluted (1.65) (0.24) 1.35
====================== ==========
Weighted average number ordinary
shares, Basic and diluted 13,062,500 13,062,500 13,062,500
====================== ==========
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2009 AND 2008
(amounts in thousands except share and per share value)
(UNAUDITED)
Six Months Six Months
Periods Ended Periods Ended
Jun. 30, 2008 Jun. 30, 2008
---------------- -------------
RMB US$ RMB
Cash flow from operating activities
Net income/ (loss) (21,510) (3,150) 17,591
Adjustments to reconcile net income/
(loss) to net cash provided by
operating activities
- Depreciation of property, plant
and equipment 16,048 2,349 12,308
- Amortization of lease prepayments 227 33 263
- Deferred income taxes (3,320) (486) --
- Bad debt expense/(recovery) 5,945 870 55
Changes in operating assets and
liabilities, net of
- Accounts receivable 13,948 2,042 (4,624)
- Inventories 1,567 229 (7,258)
- Advance to suppliers 2,504 367 (13,304)
- Prepaid expenses and other current
assets (5,842) (855) (4,379)
- Accounts payable 2,637 386 223
- Accrued expenses and other
payables (247) (35) 1,341
- Advance from customers 3,383 495 5,932
- Tax payable (3,042) (445) (2,575)
---------------- -------------
Net cash provided by operating
activities 12,298 1,800 5,572
Cash flow from investing activities
Purchases of property, plant and
equipment (88,458) (12,950) (1,989)
Restricted cash related to trade
finance (644) (94) 34,761
Addition to construction in progress 78,953 11,559 (32,420)
Deposit for purchase -- -- (21,000)
---------------- -------------
Net cash used in investing activities (10,149) (1,486) (20,648)
Cash flow from financing activities
Net proceeds from issuance of share
capital -- -- --
Principal payments of short-term bank
loans (11,585) (1,696) (119,590)
Proceeds from short-term bank loans 10,000 1,464 110,844
Net cash (used in)/provided by
financing activities (1,585) (232) (8,746)
Effect of foreign exchange rate
changes (431) (55) --
---------------- -------------
Net increase (decrease) in cash and
cash equivalent 134 28 (23,821)
Cash and cash equivalent
At beginning of period/year 15,823 2,308 30,908
---------------- -------------
At end of period/year 15,957 2,336 7,087
================ =============
SUPPLEMENTARY DISCLOSURE:
-------------------------
Interest paid 3,901 571 4,838
================ =============
Income tax paid -- -- 2,561
================ =============