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Fuwei Films Announces Unaudited Second Quarter 2014 Financial Results

-Teleconference to be Held on Friday, August 22, 2014 at 9:00 am EDT-

BEIJING, Aug. 21, 2014 /PRNewswire/ -- Fuwei Films (Holdings) Co., Ltd. (Nasdaq: FFHL) ("Fuwei Films" or the "Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced its unaudited financial results for the second quarter ended June 30, 2014.

Highlights 

  • Net sales during the second quarter ended June 30, 2014 were RMB70.0 million or US$11.3 million, compared to RMB77.4 million during the same period in 2013 representing a 9.6% decrease in sales. 
  • Net loss attributable to the Company during the second quarter ended June 30, 2014 was RMB23.0 million or US$3.7 million compared to net loss attributable to the Company of RMB18.2 million during the same period in 2013, representing an increase of RMB4.8 million for the same period in 2013.
  • Net cash used in operating activities for the six months ended June 30, 2014 was RMB7.5 million or US$1.2 million compared to net cash used in operating activities of RMB11.2 million for the six months ended June 30, 2013.
  • Basic and diluted net loss per share was RMB1.76 or US$0.28 and RMB1.39 for the three months ended June 30, 2014 and 2013, respectively.

Mr. Xiaoan He, Chairman and CEO of Fuwei Films, commented, "The second quarter financial results continue to reflect weakened market conditions due to intense competition which caused oversupply and excess capacity in the marketplace. However, I am pleased to announce that a sample diffusion film (a type of TFT-LCD optical film) was preliminarily accepted by a new customer after being delivered for testing. We expect to supply small batches of product according to this customer's purchase order. In addition, a sample base film for solar backsheets has been delivered to a customer for initial testing. This demonstrates our ability to better serve our customers by expanding our product offering to the market and we will seek to capitalize upon opportunities in emerging markets with expanded end user applications by focusing our efforts on continued innovation and R&D. We believe that with the support of the new controlling shareholder, the Company will be in a better position to adjust to various challenges and to obtain better support in the fierce marketplace."

Second Quarter of 2014 Financial Results

Net sales during the second quarter ended June 30, 2014 were RMB70.0 million or US$11.3 million, compared to RMB77.4 million during the same period in 2013, representing a decrease of RMB7.4 million or 9.6%, mainly due to the reduction of average sales price by 14.0% arising from stronger competition in China. Although the reduction of average sales price caused a decrease of RMB11.3 million, this was partially offset by an increase in sales volume of RMB3.9 million.

Overseas sales were RMB11.1 million or US$1.8 million, or 15.9% of total revenues, compared with RMB9.5 million or 12.3% of total revenues in the second quarter of 2013. The increase in overseas sales was primarily due to the increase in volume, which accounted for RMB3.3 million, although this was partially offset by the decrease of RMB1.7 million in average sales price.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended June 30, 2014 and 2013 (amounts in thousands):



Three-Month Period Ended
 June 30, 2014

% of Total

Three-Month Period Ended
June 30, 2013

% of Total



RMB

US$

RMB

Sales in China


58,873

9,490

84.1%

67,906

87.7%

Sales in other countries


11,111

1,791

15.9%

9,495

12.3%










69,984

11,281

100.0%

77,401

100.0%

Our gross loss was RMB9.5 million or US$1.5 million for the second quarter ended June 30, 2014, representing a gross loss rate of 13.6%, as compared to a gross loss rate of 3.0% for the same period in 2013. Correspondingly, gross loss rate increased by 10.6 percentage points compared to the same period in 2013. Our average product sales prices decreased by 14.0% compared to the same period last year while the average cost of goods sold decreased by 5.1% compared to the same period last year. Consequently, the amount of decrease in sales revenue was greater than the decrease in the cost of goods sold during the second quarter ended June 30, 2014 compared with the same period in 2013, which resulted in an increase in gross loss.

Operating expenses for the second quarter ended June 30, 2014 were RMB10.4 million or US$1.7 million, which was RMB3.2 million, or 23.5% lower than the same period in 2013. This decrease was mainly due to decreased R&D expenditure on new products in the second quarter of 2014.

Net loss attributable to the Company during the second quarter ended June 30, 2014 was RMB23.0 million or US$3.7 million compared to net loss attributable to the Company of RMB18.2 million during the same period in 2013, representing an increase of RMB4.8 million for the same period in 2013.

Basic and diluted net loss per share was RMB1.76 or US$0.28 and RMB1.39 for the three months ended June 30, 2014 and 2013, respectively.

Total shareholders' equity was RMB424.0 million or US$68.4 million as of June 30, 2014, compared with RMB460.3 million as of December 31, 2013.

As of June 30, 2014, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Friday, August 22, 2014, at 9:00 a.m. EDT / 9:00 p.m. Beijing time to discuss the financial 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 Conference ID: 13588942. The replay will be available until September 22, 2014, at 11:59 p.m. EDT.

About Fuwei Films

Fuwei Films 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.

For more information, please contact:

In China:

Ms Xiaoli Yu
Investor Relations Officer
Phone: +86-133-615-59266
Email: [email protected]

In the U.S.:

Ms. Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: [email protected]

 

Financial Tables to Follow


 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2014 AND DECEMBER 31, 2013

(amounts in thousands except share and per share value)

(Unaudited)

 



June 30, 2014


December 31, 2013


RMB

US$


RMB

ASSETS

Current assets 






Cash and cash equivalents


5,478

883


11,578

Restricted cash


41,787

6,736


41,422

Accounts and bills receivable, net


7,337

1,183


8,373

Inventories


32,513

5,241


38,454

Advance to suppliers


6,868

1,107


6,977

Prepayments and other receivables


25,052

4,038


26,107

Deferred tax assets - current


1,670

269


1,702

Total current assets 


120,705

19,457


134,613







Property, plant and equipment, net


505,569

81,496


524,777

Construction in progress


366

59


632

Lease prepayments, net


18,667

3,009


18,999

Advance to suppliers - long term, net


2,945

475


2,134

Long-term deposit


16,760

2,702


16,760

Other Assets


12,947

2,087


13,244

Deferred tax assets - non current


20,817

3,356


20,888







Total assets


698,776

112,641


732,047







LIABILITIES AND EQUITY

Current liabilities






Short-term borrowings


-

-


105,000

Long-term loan, current portion


1,675

270


-

Due to related parties


120,000

19,344


-

Accounts payables


35,872

5,782


33,454

Notes payable


78,200

12,606


81,990

Advance from customers


7,114

1,147


14,665

Accrued expenses and other payables

7,956

1,282


6,777

Obligations under capital leases-current


8,587

1,384


8,314

Total current liabilities


259,404

41,815


250,200







Obligations under capital leases


4,200

677


8,563

Long-term loan


8,325

1,342


10,000

Deferred tax liabilities


3,613

582


3,736







Total liabilities


275,542

44,416


272,499







Equity






Shareholders' equity






Registered capital(of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding)


13,323

2,148


13,323

Additional paid-in capital


311,907

50,278


311,907

Statutory reserve


37,441

6,035


37,441

Retained earnings


60,130

9,693


96,370

Cumulative translation adjustment


1,211

196


1,266

Total shareholders' equity


424,012

68,350


460,307

Non-controlling interest


(778)

(125)


(759)

Total equity


423,234

68,225


459,548

Total liabilities and equity


698,776

112,641


732,047

 

 


 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013

(amounts in thousands except share and per share value)

(Unaudited)

 




The Three-Month Period Ended June 30,


The Six-Month Period Ended June 30,



2014


2013


2014


2013


RMB

US$


RMB


RMB

US$


RMB

Net sales


69,984

11,281


77,401


140,689

22,679


153,978

Cost of sales


79,482

12,812


79,708


150,256

24,221


157,476












Gross loss


(9,498)

(1,531)


(2,307)


(9,567)

(1,542)


(3,498)












Operating expenses











Selling expenses


3,430

553


3,625


6,789

1,,094


7,970

Administrative expenses


7,004

1,129


9,985


14,058

2,266


19,291

Total operating expenses


10,434

1,682


13,610


20,847

3,360


27,261












Operating loss 


(19,932)

(3,213)


(15,917)


(30,414)

(4,902)


(30,759)












Other income (expense)











- Interest income


260

42


281


640

103


342

- Interest expense


(3,256)

(525)


(2,664)


(6,424)

(1,036)


(5,881)

- Others income (expense), net


25

4


(27)


(63)

(10)


(128)












Total other expense


(2,971)

(479)


(2,410)


(5,847)

(943)


(5,667)












Loss before provision for income taxes


(22,903)

(3,692)


(18,327)


(36,261)

(5,845)


(36,426)












Income tax benefit (expense)


(79)

(13)


136


20

3


159












Net loss


(22,982)

(3,705)


(18,191)


(36,241)

(5,842)


(36,267)












Net (loss) income attributable to noncontrolling interests


(1)

0


(1)


(1)

0


(1)

Net loss attributable to the Company


(22,981)

(3,705)


(18,190)


(36,240)

(5,842)


(36,266)












Other comprehensive income (loss)











- Foreign currency translation adjustments attributable to noncontrolling interest


1

0


10


(19)

(3)


12

- Foreign currency translation adjustments attributable to the Company


(7)

(1)


19


(55)

(9)


30












Comprehensive income (loss) attributable to non-controlling interest


0

0


9


(20)

(3)


11

Comprehensive loss attribute to the Company


(22,988)

(3,706)


(18,171)


(36,295)

(5,851)


(36,236)












Loss per share,
Basic and diluted


(1.76)

(0.28)


(1.39)


(2.77)

(0.45)


(2.78)

Weighted average number ordinary shares,
Basic and diluted 


13,062,500

13,062,500


13,062,500


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-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013

(amounts in thousands except share and per share value)

(Unaudited)

 



The Six-Month Period Ended June 30, 



2014


2013



RMB

US$


RMB

Cash flow from operating activities






Net loss


(36,241)

(5,842)


(36,267)

Adjustments to reconcile net loss to net cash






(used in) provided by operating activities






- Gain on disposal of property, plant and equipment


-

-


-

- Depreciation of property, plant and equipment


24,031

3,874


24,353

- Amortization of intangible assets


262

42


262

- Deferred income taxes


(20)

(3)


(159)

- Bad debt expense (recovery)


(115)

(19)


1,495

Changes in operating assets and liabilities 






- Accounts and bills receivable


1,150

185


6,797

- Inventories


5,942

958


(14,526)

- Advance to suppliers


109

18


8,701

- Prepaid expenses and other current assets


(814)

(131)


(1,916)

- Accounts payable


2,418

390


(1,641)

- Accrued expenses and other payables


1,116

180


(291)

- Advance from customers


(7,551)

(1,217)


4,402

- Tax payable


2,236

360


(2,408)







Net cash used in operating activities


(7,477)

(1,205)


(11,198)







Cash flow from investing activities






Purchases of property, plant and equipment


(4,823)

(777)


(244)

Restricted cash related to trade finance


(357)

(58)


(26,298)

Advanced to suppliers - non current


(811)

(131)


(2,288)

Amount change in construction in progress


265

43


(3,559)

Proceeds from sale of property, plant and equipment


-

-


-







Net cash used in investing activities


(5,726)

(923)


(32,389)







Cash flow from financing activities






Principal payments of short-term bank loans


(105,000)

(16,926)


(110,000)

Proceeds from short-term bank loans


-

-


107,032

Proceeds from related party


120,000

19,344


-

Payment of capital lease obligation


(4,090)

(659)


(4,164)

Change in notes payable


(3,790)

(611)


49,886

Proceeds from sale-leaseback equipment


-

-


5,000







Net cash provided by financing activities


7,120

1,148


47,754







Effect of foreign exchange rate changes


(17)

(50)


(6)







Net increase (decrease) in cash and cash equivalent


(6,100)

(1,030)


4,161







Cash and cash equivalent






At beginning of period


11,578

1,913


5,006

At end of period


5,478

883


9,167







SUPPLEMENTARY DISCLOSURE:






Interest paid


6,424

1,036


5,881

Income tax paid


-

-


-







SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:


7,883

1,271


6,220

Obligations for acquired equipment under capital lease:


12,787

2,061


20,836

 

SOURCE Fuwei Films (Holdings) Co., Ltd.

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