Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2011

BEIJING, May 10, 2011 /PRNewswire-Asia-FirstCall/ -- 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 first quarter of 2011 ended March 31, 2011.

Highlights

• Revenues were RMB 174.2 million or US$26.5 million, compared with RMB 88.5 million in the same period of 2010.
• Net income was RMB 23.6 million or US$3.6 million, compared with RMB 0.3 million in the same period of 2010.
• Basic and diluted earnings per share was RMB 1.81 or US$0.28, compared with RMB 0.02 in the same period of 2010.
• Cash and cash equivalents as of March 31, 2011 was RMB 181.9 million or US$27.7 million, compared with RMB 171.2 million as of December 31, 2010.

Mr. Xiaoan He, Chairman and CEO, said, "Fuwei Films had an excellent first quarter with significant revenue and net income growth.  We are particularly pleased that demand for our higher margin specialty products is growing.  We are also seeing increased demand for our products from other global regions like Europe and South Korea, and we will continue to commit to the products differentiation strategy."  

First Quarter of 2011 Results

Revenues were RMB 174.2 million or US$26.5 million, compared with RMB 88.5 million in the same period of 2010, which was an increase of RMB 85.7 million, or 96.9% compared with the first quarter of 2010.  The significant increase in sales was mainly due to the increase of average unit sales price together with higher volumes of specialty film sales.

Sales of specialty films in the first quarter of 2011 were RMB 39.9 million or US$6.1 million, or 22.9% of total revenues, compared with RMB 8.5 million or 9.6% of total revenues in the same period of 2010. The increased sales of specialty films were largely a result of higher demand for high value-added BOPET films following recovery from the global financial crisis.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended March 31, 2011 and 2010 (amounts in thousands):

Overseas sales during the three month ended March 31, 2011 were RMB 64.8 million or US$9.9 million, or 33.4% of total revenues, compared with RMB 11.3 million or 12.8% of total revenues in the same period of 2010. The increase in overseas sales was mainly due to increased sales prices as well as the recovery of overseas markets, resulting in the increase of demand in overseas market such as in Europe, North America, and South Korea.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended March 31, 2011 and 2010 (amounts in thousands):

Gross profit was RMB 45.1 million or US$ 6.9 million for the first three months of 2011, compared with RMB 12.8 million in the same period of 2010. Gross margin was 25.9%, compared with 14.4% in the first quarter of 2010. This was mainly due to a significant increase in the average sales price of our products during the first quarter ended March 31, 2011 compared with the same period in 2010.

Operating expenses for the three months ended March 31, 2011 was RMB 15.7 million or US$2.4 million, compared with RMB 10.9 million in the first quarter of 2010. This increase was mainly due to increased R&D expense and freight costs associated with overseas sales.

Operating income for the first quarter of 2011 was RMB 29.4 million or US$4.5 million, compared with RMB 1.8 million in the same period of 2010.

Net income during the first three months of 2011 was RMB 23.6 million or US$3.6 million, compared with RMB 0.3 million in the first quarter of 2010.

Basic and diluted earnings per share was RMB 1.81 or US$0.28, compared with RMB 0.02 in the first quarter of 2010.

Total shareholders' equity was RMB 576.2 million (US$87.8 million) as of March 31, 2011, compared with RMB 552.5 million as of December 31, 2010.

As of March 31, 2011, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.

In addition, on May 5, 2011, the Company received notification from the Weifang State-owned Assets Operation Administration Company (the "Administration Company"), that the former controlling shareholders of the Company, Messrs. Jun Yin, Duo Wang and Tongju Zhou, had transferred their entire ownership in several intermediate holding companies to the Administration Company, Ms. Qing Liu and Mr. Zhixin Han.  As a result of the transfers, and based on the information provided by the Administration Company, the Company believes that 52.9% of its outstanding ordinary shares are controlled indirectly by the Administration Company and 12.55% of its outstanding ordinary shares are jointly controlled indirectly by Ms. Liu and Mr. Han.

Conference Call Information

The Company will host a teleconference on Wednesday, May 11, 2011, at 8:00 a.m. EDT / 8:00 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 access codes: Account#: 286 and Conference ID: 371979. The replay will be available until June 11, 2011, 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'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 possible delisting of the Company's ordinary shares from the NASDAQ Global Market; 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.

Financial Tables to Follow

SOURCE Fuwei Films (Holdings) Co., Ltd.