Fuwei Films Announces Its Unaudited Financial Results for the Second Quarter of 2015

-Teleconference to be Held on Friday, August 21, 2015 at 9:00 am EDT-

Aug 20, 2015, 16:01 ET from Fuwei Films (Holdings) Co., Ltd.

BEIJING, Aug. 20, 2015 /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, 2015.

Second Quarter 2015 Financial Highlights

  • Net sales during the second quarter ended June 30, 2015 were RMB66.7 million or US$10.8 million.
  • Sales of specialty films accounted for 31.9% of revenues.
  • Overseas sales accounted for 22.7% of revenues.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, "We continue to face strong competition from emerging and incumbent players which has created oversupply relative to demand in the marketplace. While this has impacted the Company's quarterly financial results, we intend to capitalize upon opportunities in international markets. We believe that our focus on continued innovation and R&D will enable the Company to expand end-user applications and we are encouraged by this positive trend as we expect this to enable us to weather different industry and economic conditions in the periods ahead."

Second Quarter of 2015 Financial Results

Net sales during the second quarter ended June 30, 2015 were RMB66.7 million or US$10.8 million, compared to RMB70.0 million during the same period in 2014, representing a decrease of RMB3.3 million or 4.7%, mainly due to the reduction of average sales price by 7.2% arising from stronger competition in China and a 13.9% reduction in prices of main raw materials. The reduction of average sales price caused a decrease of RMB5.2 million and the sales volume increase caused an increase of RMB1.9 million.

In the second quarter of 2015, sales of specialty films were RMB21.3 million or US$3.4 million representing 31.9% of our total revenues as compared to RMB16.6 million or 23.7% in the same period of 2014, which was an increase of RMB4.7 million, or 28.3% as compared to the same period in 2014. The reduction of average sales price caused a decrease of RMB1.5 million and the increase in the sales volume caused an increase of RMB6.2 million. The increase was largely attributable to the increase in sales volume.

Overseas sales were RMB15.1 million or US$2.4 million, or 22.7% of total revenues, compared with RMB1.1 million or 15.9% of total revenues in the second quarter of 2014. The decrease of average sales price caused a decrease of RMB2.1 million and the increase in sales volume resulted in an increase of RMB6.1 million. The increase in overseas sales was mainly due to the increase in sales volume.

The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):

Three-Month Period Ended   June 30, 2015

% of Total

Three-Month Period Ended June 30, 2014

RMB

US$

RMB

% of Total

Sales in China

51,589

8,321

77.3%

58,873

84.1%

Sales in other countries

15,120

2,439

22.7%

11,111

15.9%

 

66,709

10,760

 

100.0%

69,984

 

100.0%

Our gross profit was RMB0.3 million or US$0.04 million for the second quarter ended June 30, 2015, representing a gross margin of 0.4%, as compared to a gross loss margin of 13.6% for the same period in 2014. Correspondingly, gross margin increased by 14 percentage point compared to the same period in 2014. Our average product sales prices decreased by 7.2% compared to the same period last year while the average cost of goods sold decreased by 18.6% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold was larger than that in sales revenue during the second quarter ended June 30, 2015 compared with the same period in 2014, which resulted in an increase in our gross profit.

Operating expenses for the second quarter ended June 30, 2015 were RMB13.0 million or US$2.1 million, as compared to RMB10.4 million for the same period in 2014, which was RMB2.6 million, or 25.0% higher than the same period in 2014. This increase was mainly due to depreciation charged to general and administrative expenses in the accounting period in which they are incurred as a result of lack of manufacturing from the third production line in May and June of2015.

Net loss attributable to the Company during the second quarter ended June 30, 2015 was RMB14.7 million or US$2.4 million compared to net loss attributable to the Company of RMB23.0 million during the same period in 2014, representing a decrease of RMB8.3 million for the same period in 2014.

Basic and diluted net loss per share was RMB1.12 or US$0.18 and RMB1.76 for the three months period ended June 30, 2015 and 2014, respectively.

Total shareholders' equity was RMB359.2 million or US$57.9 million as of June 30, 2015, compared with RMB388.9 million as of December 31, 2014.

As of June 30, 2015, 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 21, 2015, 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 access codes: Account#: 286 and Conference ID: 13617384. The replay will be available until September 21, 2015, 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'sBOPET 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 trends affecting the global economy, including the devaluation of the RMB by China in August 2015; 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 to Follow

 

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

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2015 AND DECEMBER 31, 2014

(amounts in thousands except share and per share value)

(Unaudited)

June 30, 2015

December 31, 2014

RMB

US$

RMB

ASSETS

Current assets

Cash and cash equivalents

10,871

1,753

9,020

Restricted cash

42,220

6,810

48,085

Accounts and bills receivable, net

16,229

2,618

9,867

Inventories

28,244

4,555

24,034

Advance to suppliers

5,160

832

7,512

Prepayments and other receivables

20,706

3,340

18,772

Deferred tax assets - current

1,802

291

2,794

Total current assets

125,232

20,199

120,084

Property, plant and equipment, net

459,549

74,121

482,534

Construction in progress

1,096

177

366

Lease prepayments, net

18,144

2,926

18,406

Advance to suppliers - long term, net

1,272

205

722

Long-term deposit

-

-

16,760

Other Assets

12,054

1,944

12,500

Deferred tax assets - non current

21,414

3,454

21,573

Total assets

638,761

103,026

672,945

LIABILITIES AND EQUITY

Current liabilities

Long-term loan, current portion

3,350

540

3,350

Due to related parties

139,734

22,538

125,938

Accounts payables

27,046

4,362

29,484

Notes payable

81,626

13,165

95,539

Advance from customers

6,236

1,006

3,392

Accrued expenses and other payables

7,467

1,204

6,095

Obligations under capital leases-current

4,196

677

8,259

Total current liabilities

269,655

43,492

272,057

Obligations under capital leases

-

-

303

Long-term loan

4,975

802

6,650

Deferred tax liabilities

5,709

921

5,816

Total liabilities

280,339

45,215

284,826

Equity

Shareholders' equity

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

13,323

2,149

13,323

Additional paid-in capital

311,907

50,308

311,907

Statutory reserve

37,441

6,039

37,441

  (Accumulated deficit) retained earnings

(4,605)

(743)

25,043

Cumulative translation adjustment

1,150

186

1,199

Total shareholders' equity

359,216

57,939

388,913

Non-controlling interest

(794)

(128)

(794)

Total equity

358,422

57,811

388,119

Total liabilities and equity

638,761

103,026

672,945

 

 

 

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014

(amounts in thousands except share and per share value)

(Unaudited)

The Three-Month Period Ended June 30,

The Six-Month Period Ended June 30, 

2015

2014

2015

2014

RMB

US$

RMB

RMB

US$

RMB

Net sales

66,709

10,760

69,984

119,485

19,272

140,689

Cost of sales

66,422

10,713

79,482

127,023

20,488

150,256

Gross margin (loss)

287

47

(9,498)

(7,538)

(1,216)

(9,567)

Operating expenses

Selling expenses

3,157

509

3,430

6,353

1,025

6,789

Administrative expenses

9,877

1,593

7,004

15,490

2,498

14,058

Total operating expenses

13,034

2,102

10,434

21,843

3,523

20,847

Operating loss 

(12,747)

(2,055)

(19,932)

(29,381)

(4,739)

(30,414)

Other income (expense)

- Interest income

218

35

260

738

119

640

- Interest expense

(2,082)

(336)

(3,256)

(4,413)

(712)

(6,424)

- Others income (expense), net

(32)

(5)

25

4,452

718

(63)

Total other income (expense)

(1,896)

(306)

(2,971)

777

125

(5,847)

Loss before provision for income taxes

(14,643)

(2,361)

(22,903)

(28,604)

(4,614)

(36,261)

Income tax benefit (expense)

(8)

(1)

(79)

(1,044)

(168)

20

Net loss

(14,651)

(2,362)

(22,982)

(29,648)

(4,782)

(36,241)

Net (loss) income attributable to noncontrolling interests

-

-

(1)

-

-

(1)

Net loss attributable to the Company

(14,651)

(2,362)

(22,981)

(29,648)

(4,782)

(36,240)

Other comprehensive income (loss)

- Foreign currency translation adjustments attributable to noncontrolling interest

-

-

1

-

-

(19)

- Foreign currency translation adjustments attributable to the Company

(25)

(4)

(7)

(49)

(8)

(55)

Comprehensive income (loss) attributable to non-controlling interest

-

-

-

-

-

(20)

Comprehensive loss attributable to the Company

(14,676)

(2,366)

(22,988)

(29,697)

(4,790)

(36,295)

Loss per share, Basic and diluted

(1.12)

(0.18)

(1.76)

(2.27)

(0.37)

(2.77)

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, 2015 AND 2014

(amounts in thousands except share and per share value)

(Unaudited)

The Six-Month Period Ended June 30, 

2015

2014

RMB

US$

RMB

Cash flow from operating activities

Net loss

(29,648)

(4,782)

(36,241)

Adjustments to reconcile net loss to net cash

used in operating activities

- Depreciation of property, plant and equipment

23,076

3,722

24,031

- Amortization of intangible assets

262

42

262

- Deferred income taxes

1,044

168

(20)

- Bad debt recovery

(4,135)

(667)

(115)

Changes in operating assets and liabilities 

- Accounts and bills receivable

(6,634)

(1,070)

1,150

- Inventories

(4,210)

(679)

5,942

- Advance to suppliers

2,518

406

109

- Prepaid expenses and other current assets

12

2

(814)

- Accounts payable

(2,439)

(393)

2,418

- Accrued expenses and other payables

1,377

222

1,116

- Advance from customers

2,844

459

(7,551)

- Tax payable

(1,499)

(242)

2,236

Net cash used in operating activities

(17,432)

(2,812)

(7,477)

Cash flow from investing activities

Purchases of property, plant and equipment

(91)

(15)

(4,823)

Restricted cash related to trade finance

5,865

946

(357)

Advanced to suppliers - non current

(550)

(89)

(811)

Amount change in construction in progress

(730)

(118)

265

Return of long-term deposit

21,000

3,387

-

Net cash provided by (used in) investing activities

25,494

4,111

(5,726)

Cash flow from financing activities

Principal payments of bank loans

(1,675)

(270)

(105,000)

Proceeds from short-term bank loans

-

-

-

Proceeds from related party

13,796

2,225

120,000

Payment of capital lease obligation

(4,366)

(704)

(4,090)

Change in notes payable

(13,913)

(2,244)

(3,790)

Proceeds from sale-leaseback equipment

-

-

-

Net cash provided by (used in) financing activities

(6,158)

(993)

7,120

Effect of foreign exchange rate changes

(53)

(7)

(17)

Net increase (decrease) in cash and cash equivalent

1,851

299

(6,100)

Cash and cash equivalent

At beginning of period

9,020

1,454

11,578

At end of period

10,871

1,753

5,478

SUPPLEMENTARY DISCLOSURE:

Interest paid

4,413

712

6,424

Income tax paid

-

-

-

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:

2,215

357

7,883

Obligations for acquired equipment under capital lease:

4,196

677

12,787

 

SOURCE Fuwei Films (Holdings) Co., Ltd.



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