BEIJING, Nov. 13, 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 its unaudited financial results for the third quarter ended September 30, 2009.
Third Quarter 2009 Highlights
* Revenues were RMB 89.6 million (US$13.1 million), compared with RMB 119.8 million in the same period of 2008 and RMB 72.0 million in the second quarter of 2009; * Gross margin was 8.8%, compared with 12.1% in the same period of 2008 but improved from 8.6% in the second quarter of 2009; * Net income was RMB 2.0million (US$0.3million), compared with a net income of RMB 7.1 million in the same period of 2008, but improved from a net loss of RMB 7.4 million in the second quarter of 2009; * Diluted EPS was RMB 0.15(US$0.02), compared with RMB 0.54 in the same period of 2008, but improved from a diluted net loss per share of RMB 0.56 in the second quarter of 2009; * Net cash inflow from operations for the first nine months of 2009 was RMB 10.7 million (US$1.6 million), compared with net cash inflow of RMB 5.6 million in the same period of 2008; and * Cash on hand at September 30, 2009 was RMB 15.8 million (US$2.3 million), compared with RMB 16.0 million at June 30, 2009.
"As we predicted, the market for consumer packaging BOPET films emerged from the bottom in the third quarter of 2009 and we are beginning to see new orders from our customers including orders for some of our specialty film products," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "The increase in our net income in the third quarter of 2009 is the result of our vigorous cost-cutting program and seasonal increase of BOPET films in domestic market as well as demand for our key products, such as the seasonal demand increase of transfer films as well as strategic increase in production of selective specialty film products such as high glossing films and heat sealable films. We are still cash flow positive for the year and we believe that our cash position is solid for our current production level."
Mr. He continued, "As we announced yesterday, this final verdict issued by the Supreme People's Court of Shandong Province brings an end to our major shareholders case. As the leading BOPET developer and producer in China, we remain optimistic on our future prospects and focused on enhancing the long-term shareholder value. Going forward, we expect a continued improvement in China's industrial cycle to enhance continuous growth of BOPET demand and balance the competition brought by the new BOPET production capacity recently placed online by other PRC manufacturers. And we plan on focus on our high-valued BOPET industry, and are trying to improve the proportion of specialty films in the product mix. We continue to believe that 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 have a better chance in enhancing our leadership position in the Chinese BOPET film industry."
Third Quarter 2009 Results
Revenues were RMB 89.6 million (US$13.1 million), compared with RMB 119.8 million in the third quarter of 2008 and RMB 72.6 million in the second quarter of 2009. The decrease in overall revenues was primarily due to decrease in demand for consumer packaging materials, as a result of global economic crisis. The sequential increase in revenues comparing with the second quarter, however, came as a result of rebound in the pricing which goes up with oil price as well as seasonal demand increase of BOPET films.
Sales of specialty films in the third quarter of 2009 were RMB 11.1 million (US$1.6 million), or 12.4% of total revenues, compared with RMB 22.1 million, or 18.5% of total revenues, in the same period of 2008, and RMB 6.5 million, or 9.0% of total revenues, in the second quarter of 2009.
The following is a breakdown of commodity and specialty film sales for the three-month periods ended September 30, 2009 and 2008 (amounts in thousands):
Three Months
Period
Three Months Period Ended
Ended Sept. 30,
September 30, 2009 2008
------------------ ----
RMB US$ % of Total RMB % of Total
Printing film 10,292 1,508 11.5% 16,661 13.9%
Stamping film 53,441 7,829 59.6% 41,945 35.0%
Metallization
film 8,105 1,187 9.0% 20,171 16.8%
Base film for
other
applications 6,616 969 7.4% 18,938 15.8%
Special film 11,149 1,633 12.4% 22,134 18.5%
------------------------ ----------------
89,603 13,126 100.0% 119,849 100%
======================== ================
Sales from overseas were RMB 6.0 million (US$0.9 million), or 6.7% of total revenues, compared with RMB 16.2 million, or 13.5% of total revenues, in the third quarter of 2008, and RMB 7.4 million, or 10.2% of total revenues, in the second quarter of 2009.
The following is a breakdown of domestic versus overseas sales for the three-month periods ended September 30, 2009 and 2008 (amounts in thousands):
Three
Months
Three Months Period
Period Ended Sept. 30,
Sept. 30, 2009 2008
------------------ ----
RMB US$ % of Total RMB % of Total
Sales in China 83,564 12,241 93.3% 103,674 86.5%
Sales in other
countries 6,039 885 6.7% 16,175 13.5%
------------------------ ----------------
89,603 13,126 100.0% 119,849 100.0%
======================== ================
Gross profit for the third quarter of 2009 was RMB 7.9 million (US$1.2 million), compared with RMB 14.6 million in the same period of 2008, and RMB 6.3 million in the second quarter of 2009. Gross margin was 8.8%, compared with 12.1% in the same period of 2008, but an improvement from the 8.6% as recorded in the second quarter of 2009. The sequential rebound in gross margin in the third quarter of 2009 comparing with the second quarter was primarily due to the increase in average sales price which is still comparatively lower than that in 2008.
Selling, general and administrative ("SG&A") expenses were RMB 7.0 million (US$1.0 million), compared with RMB 8.4 million in the same period of 2008, or RMB 7.3 million in the second quarter of 2009. SG&A as a percentage of total revenues was 7.7%, compared with 6.9% in the same period of 2008, and 10.0% in the second quarter of 2009. The reduction in SG&A comparing with the period of 2008 was mainly due to the decrease of maintenance fee of being a public company and overseas selling expense which is almost similar with that in the second quarter of 2009. The percentage of total revenues decrease is primarily due to the increase of the revenues in the third quarter.
Tax expense was RMB 0.3 million (US$0.04 million), compared with RMB 0.6 million in the same period of 2008, and tax benefit of RMB 1.2 million in the second quarter of 2009.
In the third quarter of 2009, Fuwei turned a net profit of RMB 2.0 million (US$0.3 million), compared with RMB 7.1 million in the same period of 2008 and net loss of RMB 7.4 million in the second quarter of 2009.
Diluted EPS was RMB 0.15 (US$0.02),compared with RMB 0.54 in the same period of 2008 and diluted net loss per share was RMB 0.56 in the second quarter of 2009.
Nine Month Results
For the first nine months of 2009, revenues were RMB 236.7 million (US$34.6 million), compared with RMB 348.6 million in the same period of 2008.
Sales of specialty films were RMB 21.8 million (US$3.2 million), or 9.2% of total revenues, compared with RMB 97.0 million, or 27.8% of total revenues, in the same period of 2008.
The following is a breakdown of commodity and specialty film sales for the nine-month periods ended September 30, 2009 and 2008 (amounts in thousands):
Nine Months
Nine Months Period Ended
Period Ended Sept. 30,
Sept. 30, 2009 2008
------------------ ----
RMB US$ % of Total RMB % of Total
Printing film 26,924 3,944 11.4% 48,047 13.8%
Stamping film 121,863 17,852 51.5% 87,916 25.2%
Metallization
film 28,508 4,176 12.0% 35,915 10.3%
Base film for
other 37,578 5,505
applications 15.9% 79,716 22.9%
Special film 21,818 3,196 9.2% 97,035 27.8%
-------------------------- ----------------
236,691 34,673 100.0% 348,630 100.0%
========================== ================
Sales from overseas were RMB 24.5 million (US$3.6 million), or 10.3% of total revenues, compared with RMB 48.7 million, or 14.0% of total revenues, in the same period of 2008.
The following is a breakdown of domestic versus overseas sales for the nine-month periods ended September 30, 2009 and 2008 (amounts in thousands):
Nine
Months
Period
Ended
Nine Months Period Sept. 30,
Ended Sept. 30, 2009 2008
-------------------- ----
RMB US$ % of Total RMB % of Total
Sales in China 212,229 31,090 89.7% 299,975 86.0%
Sales in other
countries 24,461 3,583 10.3% 48,654 14.0%
--------------------------- ---------------
236,691 34,673 100.0% 348,629 100.0%
=========================== ===============
Gross profit for the first nine months of 2009 was RMB 14.2 million (US$2.1 million), representing a gross margin of 6.0%, compared with 16.7% in the same period of 2008.
SG&A was RMB 30.7 million (US$4.5 million), compared with RMB 28.5 million in the same period of 2008.
Tax benefit was RMB3.4 million (US$0.5 million), compared with tax expense of RMB 2.5 million in the same period of 2008.
Net loss was RMB 19.5million (US$2.9 million), compared with net income of RMB 24.7 million in the same period of 2008.
Diluted net loss per share was RMB 1.49 (US$0.22), compared with diluted earning per share of RMB 1.89 in the same period of 2008.
Net cash provided by operating activities was RMB 10.7 million (US$1.6 million), compared with RMB 5.6 million in the first nine months of 2008.
Cash on hand as of September 30, 2009 was RMB 15.8 million (US$2.3 million), compared with RMB 16.0 million as of June 30, 2009.
Total shareholders' equity was RMB 512.0 million (US$75.0 million), compared with RMB 508.7 million as of June 30, 2009.
As of September 30, 2009, the Company had 13,062,500 basic and diluted total common shares outstanding.
Recent Events
On October 28, 2009, the Company announced that Mr. Hanyong Lee, the Vice President for Research & Development of Fuwei Films (Shandong) Co., Ltd., Fuwei's wholly owned operating subsidiary, has won an award of Enterprise Technology Innovative Leader (the "Innovation Award") from the Provincial Government of Shandong. The Innovation Award was granted in recognition of Fuwei's overall R&D resources and capabilities, and it has been granted to companies in all industries in China in the past. Although the Innovation Award does not bring any monetary advantages for Fuwei, it is considered an honorary award and is well-known among Chinese companies in the same industries.
On October 20, 2009, the Company announced that it will hold its 2009 Annual Shareholder Meeting ("Shareholder Meeting") at the TANGLA Hotel, Beijing, People's Republic of China, on November 30, 2009 at 9 a.m. (local time). Holders of record of ordinary shares of the Company at the close of business on October 15, 2009 are entitled to receive notice of and attend the Shareholder Meeting or any adjournment or postponement thereof. Beneficial owners of the Company's ordinary shares are welcome to attend the meeting in person.
On November 12, 2009, the company announced that it had become aware of the final verdict issued by the Supreme People's Court of Shandong Province, concerning the Company's three major shareholders, Mr. Jun Yin, Mr. Tongju Zhou and Mr. Duo Wang. The Supreme People's Court upheld the initial verdict issued by the Intermediate court in March 2009. The March 2009 initial verdict sentenced Mr. Yin to death, with a stay of execution for two years; the other two defendants, Mr. Zhou and Mr. Wang, each received life imprisonment; all of the personal property of the three individuals will be confiscated. The three individuals appealed the initial verdict to the Supreme People's Court of Shandong Province in March 2009. None of these individuals is involved in Fuwei's day-to-day operations.
Conference Call Information
The Company will host a teleconference on Friday, November 13, 2009, at 8:00 a.m. EST / 9:00 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: 337696. 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 SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(amounts in thousands except share and per share value)
(Unaudited)
Dec. 31,
September 30, 2009 2008
------------------ --------
RMB US$ RMB
ASSETS
Current assets
Cash and cash equivalents $ 15,822 2,318 $ 15,823
Restricted cash 10,811 1,584 10,411
Accounts and bills receivable, net 25,495 3,735 38,579
Inventories 40,511 5,935 30,589
Advance to suppliers 7,822 1,146 6,846
Prepayments and other receivables 2,525 370 1,857
Deferred tax assets - current 1,023 150 457
------------------ --------
Total current assets 104,009 15,238 104,562
Plant, properties and equipment, net 326,593 47,843 259,235
Construction in progress 235,940 34,563 319,408
Lease prepayments, net 22,114 3,240 22,507
Advanced to suppliers - Long Term 4,402 645 4,308
Goodwill 10,276 1,505 10,276
Deposit 21,000 3,076 17,613
Deferred tax assets - non current 4,903 719 1,995
------------------ --------
Total assets $729,237 106,829 $739,904
================== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $153,179 22,440 $164,764
Accounts payables 29,007 4,249 23,301
Advance from customers 16,572 2,428 8,781
Accrued expenses and other payables 3,482 510 7,460
------------------ --------
Total current liabilities 202,240 29,627 204,305
Long-term loan 15,000 2,197 5,000
------------------ --------
Total liabilities 217,240 31,824 209,305
Shareholders' equity
Registered capital(of US$0.129752
par value; 20,000,000 shares
authorized; 13,062,500 issued and
outstanding as of September 30, 2009
and December 31, 2008) 13,323 1,952 13,323
Additional paid-in capital 311,907 45,692 311,907
Statutory reserve 29,338 4,298 29,338
Retained earnings 155,486 22,777 174,970
Other comprehensive income 1,675 247 1,061
Non-controlling interest 268 39 --
------------------ --------
Total shareholders' equity 511,997 75,005 530,599
------------------ --------
Total liabilities
and shareholders' equity $729,237 106,829 $739,904
================== ========
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS PERIODS ENDED
SEPTEMBER 30, 2009 AND 2008
(amounts in thousands except share and per share value)
(UNAUDITED)
The Three Months
2009 2008
------------------------- ------------
RMB US$ RMB
Net sales $ 89,603 13,126 $ 119,849
Cost of sales (81,749) (11,976) (105,297)
------------------------- ------------
Gross profit 7,854 1,150 14,552
------------------------- ------------
Operating expenses
Selling expenses (2,868) (420) (3,857)
Administrative expenses (4,170) (611) (4,510)
------------------------- ------------
Total operating expenses (7,038) (1,031) (8,367)
------------------------- ------------
Operating income/(loss) 816 119 6,185
------------------------- ------------
Other income/(expense)
- Interest income 5 1 551
- Interest expense (2,091) (306) (392)
- Others income, net 3,547 520 1,381
------------------------- ------------
Total other income/(expense) 1,461 215 1,540
------------------------- ------------
Income (loss) before
income tax
benefit/(expense) 2,277 334 7,725
------------------------- ------------
Income tax benefit/(expense) (264) (39) (617)
Net Income/(loss) before
non-controlling interest in
subsidiary 2,013 295 7,108
Net loss attributable to
noncontrolling interests (5) (1) --
Net income/(loss)
attributable to the
Company $ 2,018 296 $ 7,108
Other comprehensive income/
(loss)
- Foreign currency
translation
adjustments 2 0.3 (300)
------------------------- ------------
Comprehensive income/(loss) 2,020 296 $ 6,808
========================= ============
Earnings per share, $ $
- Basic and diluted $ 0.15 0.02 $ 0.54
========================= ============
Weighted average number
ordinary
shares,
- basic and diluted 13,062,500 13,062,500 13,062,500
========================= ============
The Nine Months
2009 2008
------------------------- ------------
RMB US$ RMB
Net sales $ 236,691 34,673 $ 348,629
Cost of sales (222,490) (32,593) (290,503)
------------------------- ------------
Gross profit 14,201 2,080 58,126
------------------------- ------------
Operating expenses
Selling expenses (10,499) (1,538) (11,595)
Administrative expenses (20,241) (2,965) (16,939)
------------------------- ------------
Total operating expenses (30,740) (4,503) (28,534)
------------------------- ------------
Operating income/(loss) (16,539) (2,423) 29,592
------------------------- ------------
Other income/(expense)
- Interest income 148 22 619
- Interest expense (6,210) (910) (9,037)
- Others income, net (335) (49) 6,032
------------------------- ------------
Total other income/(expense) (6,398) (937) (2,386)
------------------------- ------------
Income (loss)
before income tax
benefit/(expense) (22,937) (3,360) 27,206
------------------------- ------------
Income tax benefit/(expense) 3,440 504 (2,505)
Net Income/(loss) before
non-controlling interest in
subsidiary (19,497) (2,856) 24,701
------------------------- ------------
Net loss attributable to
noncontrolling interests (5) (1) --
------------------------- ------------
Net income/(loss)
attributable to the
Company $ (19,492) (2,855) $ 24,701
Other comprehensive income/
(loss)
- Foreign currency
translation
adjustments 614 90 (133)
------------------------- -------------
Comprehensive income/(loss) $ (18,878) (2,765) $ 24,568
========================= =============
Earnings per share, $ $
- Basic and diluted $ (1.49) (0.22) $ 1.89
========================= ============
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 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2008
(amounts in thousands except share and per share value)
(UNAUDITED)
2009 2008
--------------------- ---------
RMB US$ RMB
Cash flow from
operating activities
Net income $ (19,492) (2,855) $ 24,701
Adjustments to reconcile net
income to net cash (used in)/
provided by operating activities
- Depreciation of property,
plant and equipment 25,732 3,770 18,510
- Amortization of
intangible assets 340 50 277
- Bad debt expense/(recovery) 3,767 552 662
- Non-controlling interest
in subsidiary (5) (1) --
Changes in operating assets
and liabilities, net of
- Accounts receivable 11,751 1,721 (6,213)
- Inventories (9,920) (1,455) (14,887)
- Advance to suppliers (1,070) (157) (16,887)
- Prepaid expenses and
other current assets (6,437) (943) (1,970)
- Accounts payable 5,707 836 1,274
- Accrued expenses and
other payables (1,347) (197) 1,479
- Advance from customers 7,791 1,141 4,056
- Tax payable (6,101) (894) (3,007)
--------------------- ---------
Net cash provided by
operating activities 10,716 1,568 5,137
Cash flow from investing
activities
Purchases of property,
plant and equipment (93,092) (13,636) (4,912)
Restricted cash related
to trade finance (400) (59) 50,811
Addition to construction
in progress 83,469 12,227 (35,901)
Deposit for purchase -- -- (21,000)
--------------------- ---------
Net cash used in
investing activities (10,023) (1,468) (11,002)
Cash flow from financing
activities
Principal payments of
short-term bank loans (11,585) (1,697) (275,249)
Proceeds from
short-term bank loans 10,000 1,465 253,714
--------------------- ---------
Net cash (used in)/
provided by financing
activities (1,585) (232) (21,535)
Effect of foreign exchange
rate changes 892 141 (126)
--------------------- ---------
Net increase (decrease)
in cash and cash equivalent (1) 10 (27,526)
Cash and cash equivalent
At beginning of period/year 15,823 2,308 30,909
--------------------- ---------
At end of period/year $ 15,822 2,318 $ 3,383
===================== =========
SUPPLEMENTARY DISCLOSURE:
Interest paid $ 5,991 878 $ 9,578
===================== =========
Income tax paid $ -- -- $ 3,655
===================== =========