2014

Fuwei Films Announces Fourth Quarter and Full Year 2013 Financial Results -- Teleconference to be Held on Monday, April 14, 2014, at 9:00 a.m. EDT --

BEIJING, April 11, 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 financial results for the fourth quarter and full year ended December 31, 2013.

Fuwei Films 2013 Highlights

  • Net revenues of RMB305.0 million or US$50.4 million.
  • Positive net cash from operations of RMB3.1 million or US$0.5 million.
  • Testing of a type of TFT-LCD optical film from Fuwei's third production line commenced with clients in the fourth quarter of 2013.
  • Fuwei Films was awarded the "Shandong Famous Brand" designation by Shandong Provincial Quality Supervision Bureau for an additional five years
  • A public auction was held on March 25, 2014 by the Weifang State-owned Assets Operation Administration Company, Fuwei's controlling shareholder, to sell over 6,912,503 (or 52.9%) of the Company's outstanding ordinary shares it owned. The successful bidder, Shandong SNTON Optical Materials Technology Co., Ltd., is expected to receive control over 6,912,503 (or 52.9%) of the Company's outstanding ordinary shares at a price of RMB101,800 (approximately US$16,573) or approximately US$2.40 per ordinary share. The transfer process is expected to be completed by the end of April 2014.

Mr. Xiaoan He, Chairman and CEO of Fuwei Films commented, "2013 was a challenging year for Fuwei Films with increased competition and excessive capacity resulting in significant reduction of selling prices. Despite the challenges in the marketplace, Fuwei Films focused on innovation and completed the trial operation of its third production line. We believe the addition of the third production line is a sound strategy that will help us deliver long-term value for our shareholders. We are confident that our high-end specialty films and enhanced product portfolio will help us attract new clients and expand relationships with existing customers. This strategy is designed to keep Fuwei Films strong despite global economic fluctuations. As we look to 2014, we will seek to capitalize upon opportunities in emerging markets and technologies by focusing efforts on continued innovation and R&D."

Fourth Quarter 2013 Results

Revenues for the fourth quarter of 2013 were RMB75.1 million or US$12.4 million, compared with RMB100.7 million in the fourth quarter of 2012, a decrease of RMB25.6 million, or 25.4%, mainly due to the decrease in selling prices and volumes compared to the same period in 2012 arising from stronger competition attributed to increased capacity in China and overseas.

Sales of specialty films for the fourth quarter of 2013 were RMB19.1 million or US$3.2 million, or 25.5% of total revenues, compared with RMB27.6 million or 27.4% of total revenue in the fourth quarter of 2012. The decrease was mainly attributable to decreased selling prices compared to those in 2012.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2013 and 2012 (amounts in thousands):



Three months period ended



December 31,

2013

% of Total

December 31,

2012

% of Total



RMB

US$

RMB

Stamping and transfer film


35,166

5,809

46.9%

54,434

54.1%

Printing film


8,339

1,378

11.1%

8,621

8.6%

Metallized film


3,864

638

5.1%

4,520

4.5%

Specialty film


19,128

3,160

25.5%

27,603

27.4%

Base film for other applications


8,585

1,418

11.4%

5,492

5.5%








Total


75,082

12,403

100%

100,670

100%

Overseas sales for the fourth quarter of 2013 were RMB7.0 million or US$1.2 million, or 9.3% of total revenues, compared with RMB14.6 million or 14.5% of total revenues in the fourth quarter of 2012.  The decrease in overseas sales was mainly due to the slow growth in demand from enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to decreases in orders from the overseas market compared to the same period of 2012.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2013 and 2012 (amounts in thousands):



Three-month period ended



December 31,

2013

% of Total

December 31,

2012

% of Total



RMB

US$

RMB

Sales in China


68,126

11,254

90.7%

86,070

85.5%

Sales in other countries


6,956

1,149

9.3%

14,600

14.5%








Total


75,082

12,403

100%

100,670

100.0%

Gross loss for the fourth quarter of 2013 was RMB 2.1 million or US$0.34 million, compared with a gross loss of RMB2.8 million in the fourth quarter of 2012. Gross loss margin was 2.8%, the same as compared with the fourth quarter of 2012.

Operating expenses for the fourth quarter of 2013 were RMB12.1 million or US$2.0 million compared with RMB24.9 million in the fourth quarter of 2012. This decrease was mainly due to the lack of goodwill impairment.

Operating loss for the fourth quarter of 2013 was RMB14.2 million US$2.3 million, compared with operating loss of RMB27.8 million in the fourth quarter of 2012.

Net loss attributable to the Company for the fourth quarter of 2013 was RMB0.5 million or  US$0.08 million, compared with net loss attributable to the Company RMB 12.5 million in the fourth quarter of 2012. Basic and diluted loss per share was RMB0.04 or US$0.01, compared with basic and diluted loss per share of RMB0.96 in the fourth quarter of 2012.

2013 Full Year Results

During the fiscal year ended December 31, 2013, net revenues were RMB305.0 million or US$50.3 million, compared to RMB372.9 million during the same period in 2012, representing a decrease of RMB67.9 million or 18.2%, mainly due to the reduction of average sales price by 4.9% and total sales volumes by 14.0%. The reduction of average sales price caused a decrease of RMB15.6 million and sales volume accounted for a decrease of RMB52.3 million.

In 2013, sales of specialty films were RMB89.4 million or US$14.8 million or 29.3% of total revenues as compared to RMB92.5 million or 24.8% in 2012, which was a decrease of RMB3.1 million, or 3.4%, as compared to the same period in 2012. The reduction of average sales price caused a decrease of RMB5.6 million and sales volume factored an increase of RMB2.5 million. The decrease was largely attributable to the decrease in sales prices for films in electronics and high-end packaging.

The Company's revenue by significant types of films for the periods ended December 31, 2013 and 2012 is as follows (amounts in thousands):



 For the year ended December 31,



2013

% of Total

2012

% of Total



RMB

US$

RMB

Stamping and transfer film


142,309

23,508

46.7%

202,029

54.2%

Printing film


27,852

4,601

9.1%

42,449

11.4%

Metallized film


17,686

2,922

5.8%

18,886

5.1%

Specialty film


89,382

14,764

29.3%

92,536

24.8%

Base film for other applications


27,721

4,579

9.1%

16,966

4.5%



304,950

50,374

100.0%

372,866

100.0%

Overseas sales were RMB41.9 million or US$6.9 million, or 13.7% of total revenues, compared with RMB70.6 million or 18.9% of total revenues in 2012. The increase of average sales price caused an increase of RMB1.6 million and sales volume accounted for a decrease of RMB30.3 million. The decrease in overseas sales was mainly due to the slow growth in demand, enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to decreases in orders from the overseas market compared to the same period of 2012.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2013 and 2012 (amounts in thousands):



For the year ended December 31,



2013

% of Total

2012

% of Total



RMB

US$

RMB

Sales in China


263,076

43,457

86.3%

302,290

81.1%

Sales in other countries


41,874

6,917

13.7%

70,576

18.9%



304,950

50,374

100.0%

372,866

100.0%

Gross loss was RMB15.4 million or US$2.5 million for the year of 2013, representing a gross loss margin of 5.0%, as compared to a gross loss margin of 0.8% in 2012. Gross margin decreased by 4.2 percentage points compared to the same period in 2012. Our average unit sales price decreased by 4.9% compared to last year due to the excess capacity and stronger competition in the market. In addition, the main raw materials used in the production of BOPET films, polyethylene terephthalate (or PET) resin and additives, comprised approximately 71.4% of our total costs of goods sold and its prices were greatly influenced by price fluctuation in crude oil. Fuwei's main raw material costs, PET resin, were reduced by 3.0% compared to last year. Moreover, remaining costs with the exception of raw materials accounted for approximately 28.6% of our total cost of goods sold which increased by 1.1% compared to that in 2012. Consequently, the decrease in product sales price exceeded that in cost of goods sold per unit during 2013 compared with 2012, which contributed to the significant increase in gross loss.

Operating expenses during the year ended December 31, 2013 were RMB49.0 million or US$8.1 million, a decrease of RMB11.9 million, or 19.6%, as compared to 2012. The decrease was mainly due to lack of goodwill impairment for the year ended December 31, 2013.

Total other expense is a combination result of interest income, interest expense and other income (expense). Total other expenses during the year ended December 31, 2013 was RMB4.6 million or US$0.8 million, compared to total other income of RMB1.8 million in 2012. Total other expense of 2013 increased compared to 2012, was mainly due to the expense of interest in the current year while all interest payments were capitalized in 2012. Interest payments totaled RMB12.2 million or US$2.0 million during 2013, RMB1.0 million or 8.9% higher than that in 2012, which was mainly due to higher interest payments associated with the capital lease obligations.

Income tax benefit during the year ended December 31, 2013 was RMB10.0 million or US$1.7 million compared to an income tax benefit of RMB7.7 million during 2012, which was mainly attributable to tax effect of changes in deferred tax during 2013.

Net loss attributable to the Company for the full year 2013 was RMB59.0 million or US$9.7 million, compared with net loss of RMB54.4 million in 2012.

Net cash provided by operating activities was RMB3.1 million or US$0.5 million for the year ended December 31, 2013 as compared to net cash provided by operating activities of RMB46.5 million for the year ended December 31, 2012. This decrease in cash flows from operating activities was attributable primarily to the increased operating loss in 2013.

Cash and cash equivalents on December 31, 2013 was RMB11.6 million or US$1.9 million, compared with RMB5.0 million as of December 31, 2012.

Conference Call Information

The Company will host a teleconference on Monday, April 14, 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: 13579477. The replay will be available until May 14, 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. ("Shandong Fuwei"). Shandong Fuwei develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, otherwise known as BOPET film (biaxially oriented polyethylene terephthalate). Fuwei Films' 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 is 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: fuweiIR@fuweifilms.com

In the U.S.:

Ms. Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: vivian.chen@grayling.com

Financial Tables Follow

 

FUWEI FILMS (HOLDINGS) CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2013 and 2012
(amounts in thousands, except share and per share data)

 



December 31, 2013


December 31, 2012


RMB

US$


RMB

ASSETS

Current assets






Cash and cash equivalents


11,578

1,913


5,006

Restricted cash


41,422

6,842


21,457

Accounts and bills receivable, net


8,373

1,383


21,587

Inventories


38,454

6,352


34,291

Advance to suppliers


6,977

1,153


13,543

Prepayments and other receivables


26,107

4,313


26,174

Deferred tax assets - current


1,702

281


1,857

Total current assets


134,613

22,237


123,915







Property, plant and equipment, net


524,777

86,687


233,335

Construction in progress


632

104


337,990

Lease prepayments, net


18,999

3,138


19,523

Advance to suppliers - long term, net


2,134

353


5,299

Long-term deposit


16,760

2,769


16,760

Other Assets


13,244

2,188


262

Deferred tax assets - non current


20,888

3,450


10,466







Total assets


732,047

120,926


747,550







LIABILITIES AND EQUITY

Current liabilities






Short-term borrowings


105,000

17,345


110,000

Accounts payables


33,454

5,526


28,796

Notes payable


81,990

13,544


38,299

Advance from customers


14,665

2,422


11,714

Accrued expenses and other payables


6,777

1,119


6,831

Obligations under capital leases-current


8,314

1,373


6,282

Total current liabilities


250,200

41,329


201,922







Obligations under capital leases


8,563

1,415


13,718

Long-term loan


10,000

1,652


10,000

Deferred tax liabilities


3,736

617


3,476







Total liabilities


272,499

45,013


229,116







Equity






Shareholders' equity






Registered capital(of US$0.129752 par value; 20,000,000 shares

authorized; 13,062,500 issued and outstanding)


13,323

2,201


13,323

Additional paid-in capital


311,907

51,523


311,907

Statutory reserve


37,441

6,185


37,441

Retained earnings


96,370

15,919


155,341

Cumulative translation adjustment


1,266

210


1,222

Total shareholders' equity


460,307

76,038


519,234

Non-controlling interest


(759)

(125)


(800)

Total equity


459,548

75,913


518,434

Total liabilities and equity


732,047

120,926


747,550

 


FUWEI FILMS (HOLDINGS) CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012
(amounts in thousands except share and per share value)

 


The Three-Month Period Ended December 31,

The Twelve-Month Period Ended December 31, 


2013


2012


2013


2012


RMB

US$


RMB


RMB

US$


RMB

Net sales

75,082

12,403


100,670


304,950

50,374


372,866

Cost of sales

77,152

12,745


103,498


320,375

52,922


375,973











Gross(loss)

(2,070)

(342)


(2,828)


(15,425)

(2,548)


(3,107)











Operating expenses










Selling expenses

4,878

806


4,887


16,839

2,782


18,212

Administrative expenses

7,204

1,190


9,771


32,130

5,307


32,389

Goodwill impairment

-

-


10,276


-

-


10,276

Total operating expenses

12,082

1,996


24,934


48,969

8,089


60,877











Operating (loss)  

(14,152)

(2,338)


(27,762)


(64,394)

(10,637)


(63,984)











Other income /(expense)










- Interest income

189

31


(1,570)


1,024

169


1,022

- Interest expense

(647)

(107)


8,621


(10,094)

(1,667)


-

- Others income /(expense), net

4,898

809


323


4,505

744


798

Total other income /(expense)

4,440

733


7,374


(4,565)

(754)


1,820











(Loss) Income  before provision

for income taxes

(9,712)

(1,605)


(20,388)


(68,959)

(11,391)


(62,164)











Income tax benefit (expense)

10,214

1,687


7,860


10,007

1,653


7,727











Net (Loss) /income 

502

82


(12,528)


(58,952)

(9,738)


(54,437)











Net income (Loss) attributable to

noncontrolling interests

3

0


(1)


19

3


(10)

Net (loss) income attributable to the Company

499

82


(12,527)


(58,971)

(9,741)


(54,427)











Other comprehensive income

(loss):










- Foreign currency translation

adjustments attributable to

noncontrolling interest

8

1


7


22

4


8

- Foreign currency translation

adjustments attributable to

the Company

13

2


9


44

7


(8)











Comprehensive income (loss)

attributable to non-controlling

interest

11

1


6


41

7


(2)

Comprehensive (loss) income attribute to the Company

512

84


(12,518)


(58,927)

(9,734)


(54,435)











(Loss) Earnings per share,
Basic and diluted

(0.04)

(0.01)


(0.96)


(4.51)

(0.74)


(4.17)

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
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2013, 2012 and 2011

 



The Years Ended December 31, 



2013


2012

2011



RMB

US$


RMB

RMB

Cash flow from operating activities







Net (loss) income


(58,952)

(9,738)


(54,437)

21,038

Adjustments to reconcile net (loss) income to net cash







provided by(used in) operating activities







- Loss on disposal of property, plant and equipment


33

5


10

-

- Loss on goodwill impairment


-

-


10,276

-

- Depreciation of property, plant and equipment


48,161

7,956


48,709

43,783

- Amortization of intangible assets


524

87


524

454

- Deferred income taxes


(10,007)

(1,653)


(7,727)

165

- Bad debt (recovery) expense


(1,744)

(288)


1,026

(354)

- Inventory provision


-

-


-

3,533

Changes in operating assets and liabilities 







- Accounts and bills receivable


13,615

2,249


31,460

(26,620)

- Inventories


(4,164)

(688)


7,483

7,270

- Advance to suppliers


7,909

1,306


(6,351)

2,167

- Prepaid expenses and other current assets


(398)

(66)


29,192

(30,180)

- Accounts payable


4,658

769


9,579

5,021

- Accrued expenses and other payables


38

6


789

(7,185)

- Advance from customers


2,952

488


(162)

(25,415)

- Tax payable


465

77


(23,920)

(7,695)








Net cash provided by (used in) operating activities


3,090

510


46,451

(14,018)








Cash flow from investing activities







Purchases of property, plant and equipment


(4,416)

(729)


(5,285)

(35,943)

Restricted cash related to trade finance


(19,974)

(3,299)


80,752

(100,915)

Advanced to suppliers - non current


3,165

523


57,500

(273)

Amount change in construction in progress


(8,785)

(1,451)


(207,432)

17,806

Interest capitalization related to CIP


(2,059)

(340)


(11,174)

-

Proceeds from sale of property, plant and equipment


-

-


250

-








Net cash used in investing activities


(32,069)

(5,296)


(85,389)

(119,325)








Cash flow from financing activities







Principal payments of short-term bank loans


(110,000)

(18,171)


(168,501)

(142,000)

Proceeds from short-term bank loans


105,000

17,345


110,000

148,501

Payment of capital lease obligation


(8,123)

(1,342)


-

-

Change in notes payable


43,691

7,217


38,299

-

Proceeds from sale-leaseback equipment


5,000

826


20,000

-








Net cash (used in) provided by financing activities


35,568

5,875


(202)

6,501








Effect of foreign exchange rate changes


(17)

20


(26)

(213)








Net increase(decrease) in cash and cash equivalent


6,572

1,109


(39,166)

(127,055)








Cash and cash equivalent







At beginning of period/year


5,006

804


44,172

171,227

At end of period/year


11,578

1,913


5,006

44,172








SUPPLEMENTARY DISCLOSURE:







Interest paid


12,153

2,008


11,174

10,227

Income tax paid


-

-


-

9,654








SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND

FINANCIAL ACTIVITIES:







Account payable for plant and equipment:


7,466

1,233


6,003

1,730

Obligations for acquired equipment under capital lease:


16,877

2,788


20,000

-

 

SOURCE Fuwei Films (Holdings) Co., Ltd.



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