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Highlights
-- Revenues were RMB 74.5 million (US$10.9 million), compared with
RMB 104.0 million in the same period of 2008;
-- Net loss was RMB 14.1 million (US$2.1 million), compared with a net
income of RMB 7.9 million in the same period of 2008;
-- Diluted net loss per share was RMB 1.08 (US$0.16), compared with
diluted EPS of RMB 0.61 in the same period of 2008;
-- Net cash provided by operations was RMB 9.2 million (US$1.3 million),
compared with RMB 4.2 million in the same period of 2008;
-- Cash on hand at March 31, 2009 was RMB 22.8 million (US$3.3 million),
compared with RMB 15.8 million at year ended December 31, 2008
"We are seeing signs of economic recovery in China, and we believe the market demand for our BOPET film products to have stabilized," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "Fuwei in the second half of last year was adversely affected by a significant drop in demand for our specialty films, as well as the continuingly high price of raw materials. To counter the negative trends, we took immediate actions to control costs in the first quarter, such as closing our sales office in Japan, shutting our leased production line, reducing the number of employees, and so on. At the same time, we were pleased to see the Chinese government also taking decisive actions to rejuvenate exporters, such as bringing the export tax rebates for BOPET films from 5% back to 11%, which could help us our products compete better in foreign markets. We believe that our internal efforts as well as the general improvement in the global economy will help us improve business in the rest of this year."
First Quarter 2009 Results
Revenues were RMB 74.5 million (US$10.9 million), compared with RMB 104.0 million in the same period of 2008.
Sales of specialty films in the first quarter of 2009 were RMB 4.1 million (US$0.6 million), or 5.6% of total revenues, compared with RMB 33.8 million in the same period of 2008.
The following is a breakdown of commodity and specialty film sales for the
three-month periods ended March 31, 2009 and March 31, 2008 (amounts in
thousands):
Three-month period ended
March 31,2009 March 31,2008
RMB US$ % of Total RMB % of Total
Printing film 7,128 1,041 9.6% 19,230 18.5%
Stamping film 31,188 4,556 41.9% 21,211 20.4%
Metallization film 12,273 1,793 16.5% 2,901 2.8%
Base film for other
applications 19,780 2,889 26.5% 26,927 25.9%
Specialty film 4,148 606 5.6% 33,765 32.5%
Total 74,517 10,885 100.0% 104,034 100.0%
Sales from overseas were RMB 10.5 million (US$1.5 million), or 14.1% of total revenues, compared with RMB 24.1 million in the same period of 2008.
The following is a breakdown of domestic versus overseas sales for the
three-month periods ended March 31, 2009 and March 31, 2008 (amounts in
thousands):
Three-month period ended
March 31,2009 March 31,2008
RMB US$ % of Total RMB % of Total
Sales in China 64,034 9,354 85.9% 79,899 76.8%
Sales in other
countries 10,483 1,531 14.1% 24,135 23.2%
Total 74,517 10,885 100.0% 104,034 100.0%
Gross profit for the first quarter of 2009 was RMB 73,000 (US$11,000), compared with RMB 21.6 million in the same period of 2008. Gross margin was 0.1%, compared with 20.8% in the same period of 2008. The decrease in gross profit and gross margin was primarily due to the decrease of the sales price of our products as well as the sharp decline of the sales of specialty films.
SG&A was RMB 16.4 million (US$2.4 million), compared with RMB 11.2 million in the same period of 2008. The increase was mainly due to the increased delivery fees, and the increased allowances for accounts receivables and other receivables.
Operating loss was RMB 16.3 million (US$2.4 million), compared with operating income of RMB 10.5 million in the same of 2008.
Tax benefit was RMB 2.5 million (US$0.3 million), compared with tax expense of RMB 1 million in the same period of 2008.
Net loss was RMB 14.1million (US$2.1 million), compared with net income of RMB 7.9 million in the same period of 2008. Diluted net loss per share was RMB 1.08 (US$0.16), compared with diluted EPS of RMB 0.61 in the first quarter of 2008.
Net cash provided by operating activities was RMB 9.2 million (US$1.3million), compared with RMB 4.2 million in the same period of 2008.
Cash on hand as of March 31, 2009 was RMB 22.8 million (US$3.3 million), compared with RMB 15.8 million as of December 31, 2008.
Total shareholders' equity was RMB 516.5 million (US$75.4 million) as of March 31, 2009, compared with RMB 530.6 million as of December 31, 2008.
As of March 31, 2009, the Company had 13,062,500 basic and diluted total common shares outstanding.
Recent Events
On April 15, 2009, Fuwei announced the dismissal of Hampden Kent Group LLC ("HKG")'s claims against the Company filed by the American Arbitration Association ("AAA")'s International Centre for Dispute Resolution (the" ICDR"), without prejudice to HKG's right to re-file these claims. In December 2007, HKG filed a demand for arbitration with the ICDR, seeking a penalty fee against the Company in the amount of $3.8 million, relating to services allegedly performed by HKG in attempting to provide financing to the Company pursuant to an August 19, 2006 agreement between the parties. Pursuant to the agreement, any dispute between the parties was to be resolved by binding arbitration in accordance with the AAA's Commercial Arbitration Rules.
On April 7, 2009, the Company announced that Mr. Bin Sun, who was then the President of Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"), the Company's wholly owned operating subsidiary, would not remain with the Company after his contract expired at the end of April 2009. Mr. Sun had been Fuwei Shandong's President since January 2007. The Company's Chairman and CEO, Mr. Xiaoan He, assumed Mr. Sun's general managerial position at Fuwei Shandong, effective May 1, 2009. Mr. He remains the Company's Chairman and CEO. The Company also announced that the Board of Directors of the Company accepted the resignation of Mr. Bo Xu, the Secretary of the Board of Directors, Mr. Bo Xu, on March 31, 2009. The Company's Senior Vice President, Mr. Zhibing Qian, assumed Mr. Xu's role, effective April 1, 2009.
Conference Call Information
The Company will host a teleconference on Wednesday, May 13, 2009, at 8:00 a.m. EDT / 8:00 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. The call is being simultaneously Webcast and can be accessed on Fuwei's Website at http://www.fuweiholdings.com . Please visit the Website at least 15 minutes prior to the scheduled start time to register for the Web cast and download any necessary audio software.
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: 323204. 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 Films conducts its business through its wholly owned subsidiary, 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 MARCH 31, 2009 AND DECEMBER 31, 2008
(amounts in thousands except share and per share value)
As of Mar. 31, As of Dec.
2009 (Unaudited) 31, 2008
RMB US$ RMB
ASSETS
Current assets
Cash and cash equivalents 22,764 3,325 15,823
Restricted cash 7,764 1,134 10,411
Accounts receivable, net 27,628 4,036 38,579
Inventory 33,222 4,853 30,589
Advance to suppliers 2,813 411 6,846
Prepayments and other receivables 1,528 223 1,857
Deferred tax assets - current 1,379 201 457
Total current assets 97,098 14,183 104,562
Plant and equipment, net 252,377 36,867 259,235
Construction in progress 321,613 46,981 319,408
Lease prepayments, net 22,376 3,269 22,507
Advanced to suppliers - Long Term 4,613 675 4,308
Intangible assets -- -- --
Goodwill 10,276 1,501 10,276
Deposit 18,808 2,747 17,613
Deferred tax assets - non-current 3,566 521 1,995
Total assets 730,727 106,744 739,904
Current liabilities
Short-term borrowings 152,500 22,277 164,764
Accounts payables 23,257 3,397 23,301
Advance from customers 17,866 2,610 8,781
Accrued expenses and other payables 5,652 826 7,460
Deferred tax liabilities -- -- --
Total current liabilities 199,275 29,110 204,305
Long-term loan 15,000 2,191 5,000
Total liabilities 214,275 31,301 209,305
Shareholders' equity
Registered capital (US$0.129752 par
value; 20,000,000 shares authorized;
13,062,500 shares issued and
outstanding) 13,323 1,946 13,323
Additional paid-in capital 311,907 45,563 311,907
Statutory reserve 29,338 4,286 29,338
Retained earnings 160,835 23,495 174,970
Cumulative translation adjustment 1,049 153 1,061
Total shareholders' equity 516,452 75,443 530,599
Total liabilities and shareholders'
equity 730,727 106,744 739,904
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2009 AND 2008
(amounts in thousands except share and per share value)
(UNAUDITED)
Three-Month Period ended Mar. 31
2009 2008
RMB US$ RMB
Revenue 74,517 10,885 104,034
Cost of revenue (74,444) (10,874) (82,409)
Gross profit 73 11 21,625
Operating expenses
Selling expenses (4,897) (715) (3,438)
Administrative expenses (11,462) (1,675) (7,724)
Total operating expenses (16,359) (2,390) (11,163)
Operating income/(loss) (16,286) (2,379) 10,463
Other income/(expense)
- Interest income 101 15 16
- Interest expense -- -- (3,790)
- Other, net (445) (65) 2,241
Total other income/(expense) (344) (50) (1,533)
Income/(loss) before income tax
expense (16,630) (2,429) 8,930
Income tax benefit/(expense) 2,494 364 (993)
Net income/(loss) (14,136) (2,065) 7,937
Other comprehensive income
-Foreign currency translation
adjustments (11) (2) 620
Comprehensive income (14,147) (2,083) 8,557
Earnings per share, basic and diluted (1.08) (0.16) 0.61
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 THREE-MONTH PERIOD ENDED MARCH 31, 2009 AND 2008
(amounts in thousands except share and per share value)
(UNAUDITED)
Period Ended Mar. 31, Period Ended
2009 Mar. 31, 2008
RMB US$ RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) (14,136) (2,065) 7,937
Adjustments to reconcile net income
to net cash provided by operating
activities
- Depreciation of property, plant and
equipment 7,284 1,064 5,909
- Amortization of intangible assets 113 17 149
- Deferred income taxes (2,493) (364) --
- Bad debt expense/(recovery) 6,148 898 73
Changes in operating assets and
liabilities, net of
Share capital contribution - rental
and interest paid by shareholders -- -- 2,756
- Accounts receivable 9,534 1,393 856
- Inventories (2,632) (385) (8,020)
- Advance to suppliers 3,728 545 --
- Prepaid expenses and other current
assets (5,579) (815) (18,859)
- Accounts payable (44) (6) 1,695
- Accrued expenses and other payables (361) (53) 11,667
- Advance from customers 9,086 1,327 --
- Tax payable (1,445) (211) --
Net cash provided by operating
activities 9,203 1,344 4,162
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and
equipment (427) (62) (946)
Restricted cash related to trade
finance 2,647 387 33,464
Addition to construction in progress (2,205) (322) (25,673)
Deposit for purchase -- -- (21,000)
Net cash provided by/(used in)
investing activities 15 2 (19,155)
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from issuance of share
capital
Principal payments of short-term bank
loans (12,264) (1,792) (12,869)
Proceeds from short-term bank loans 10,000 1,461 11,139
Net cash (used in)/provided by
financing activities (2,264) (331) (1,730)
Effect of foreign exchange rate
changes (13) (2) (2,770)
Net increase/(decrease) in cash and
cash equivalent 6,941 1,017 (19,493)
Cash and cash equivalent
At beginning of period/year 15,823 2,308 30,909
At end of period/year 22,764 3,325 11,416
Supplemental disclosure of cash flow
information
-Interest paid 1,777 260 2,966
-Income taxes paid -- -- 802
For more information, please contact:
In China:
Fuwei Films
Ms. Maggie Huang
Investor Relations Manager Tel: +86-10-8518-5620
Email: fuweiIR@fuweifilms.com
In the U.S.:
Grayling
Ms. Leslie Wolf-Creutzfeldt
Investor Relations
Tel: +1-646-284-9472
Email: leslie.wolf-creutzfeldt@us.grayling.com
SOURCE Fuwei Films (Holdings) Co. Ltd.
http://www.fuweiholdings.com/
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