Fuwei Films Announces Its Fourth Quarter & Full Year 2010 Financial Results

BEIJING, March 25, 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 financial results for the fourth quarter and full year ended December 31, 2010.

Financial Results 2010 Highlights

• Revenues for 2010 were RMB 501.5 million or US$75.8 million, compared with RMB 320.7 million in 2009.
• Net income for 2010 was RMB 40.8 million or US$6.2 million, compared with net loss of RMB 19.0 million in 2009.
• Basic and diluted earnings per share for 2010 was RMB 3.12 or US$0.47, compared with basic and diluted net loss per share of RMB 1.45 in 2009.
• Cash and cash equivalents as of December 31, 2010 was RMB 171.2 million or US$25.9 million, compared with RMB 26.8 million as of December 31, 2009.

"2010 was a profitable year for Fuwei with significant increases in both revenue and net income, which was mainly due to higher demand and sales prices," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "We believe that we are well positioned to leverage our market leadership and competitive advantages. In 2011, we plan to continue to focus on our R&D, expansion in global markets and the acceleration of our thick-film production line construction."

Fourth Quarter 2010 Results

Revenues for the fourth quarter of 2010 were RMB 173.5 million or US$26.2 million, compared with RMB 84.0 million in the fourth quarter of 2009, which was an increase of RMB 89.5 million, or 106.5% compared with the fourth quarter of 2009, mainly due to the significant increase in the price of goods sold.

Sales of specialty films for the fourth quarter of 2010 were RMB 34.7 million or US$5.2 million, or 20.0% of total revenues, compared with RMB 12.2 million or 14.5% of total revenue in the fourth quarter of 2009, which was mainly due to higher demand for specialty films and higher sales price of goods sold.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2010 and 2009 (amounts in thousands):

Overseas sales for the fourth quarter of 2010 were RMB 36.1 million or US$5.5 million, or 20.8% of total revenues, compared with RMB 11.1 million or 13.3% of total revenues in the fourth quarter of 2009, which was mainly due to increased overseas demand and higher sales prices.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2010 and 2009 (amounts in thousands):

Gross profit for the fourth quarter of 2010 was RMB 57.6 million or US$ 8.7 million, compared with RMB 10.4 million in the fourth quarter of 2009. Gross margin was 33.2%, compared with 12.4% in the fourth quarter of 2009. The increase in gross profit was primarily due to the significant increase in sales prices.

Operating expenses for the fourth quarter of 2010 was RMB 20.6 million or US$ 3.1 million, compared with RMB 10.4 million in the fourth quarter of 2009. This increase was mainly due to the increase of R&D expenses, accrued class action indemnity and related legal fees, and overseas sales expenses.

Operating income for the fourth quarter of 2010 was RMB 37.0 million or US$5.6 million, compared with operating loss of RMB 8,000 in the fourth quarter of 2009.

Net income for the fourth quarter of 2010 was RMB 25.4 million or US$3.8 million, compared with RMB 0.5 million in the fourth quarter of 2009. Basic and diluted earnings per share was RMB 1.95 or US$0.29, compared with RMB 0.04 in the fourth quarter of 2009.

2010 Full Year Results

During the fiscal year ended December 31, 2010, our revenues were RMB 501.5 million or US$ 75.8 million, which is an increase of RMB 180.7 million or 56.3%, as compared to the same period for 2009. The significant increase in revenue was mainly due to the increase of average unit sales price.

In 2010, sales of specialty films were RMB 88.0 million or US$ 13.3 million, or 17.5% of our total revenues as compared to RMB 34.0 million and 10.6% in 2009, which was an increase of RMB 54.0 million or 158.7%, as compared to the same period in 2009. The increase was mainly attributable to the increased demand for high value-added packaging. Furthermore, the increase of the sales of some specialty films, such as dry films also attributed to the sales increase.

The following is a breakdown of commodity and specialty film sales for the periods ended December 31, 2010 and 2009 (amounts in thousands):

Overseas sales were RMB 103.7 million or US$15.7 million, or 20.7% of total revenues, compared with RMB35.6 million or 11.1% of total revenues in 2009.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2010 and 2009 (amounts in thousands):

Gross profit in 2010 was RMB 130.6 million or US$19.7 million, representing a gross margin of 26.0%, an increase of RMB 106.0 million or 430.4% compared with RMB 24.6 million or gross margin of 7.7% in the same period of 2009. The increase in gross margin was mainly due to the increase of sales price that was much higher than the increase of unit price of cost of goods sold.

Operating expenses during the year ended December 31, 2010 was RMB 70.9 million or US$ 10.7 million, which was an increase of RMB 29.8 million, or 72.3%, as compared to the same period for 2009. This increase was mainly due to the increase of R&D expenses, accrued class action indemnity and related legal fees, and overseas sales expenses.

Other expenses during the year ended December 31, 2010 was RMB 8.9 million or US$ 1.3 million, which was an increase of RMB 2.4 million, or 37.0%, as compared to the same period for 2009. The increase was mainly due to bank loan interest increase of RMB 2.3 million.

The effective tax rate was 21.8% and 17.7% in 2010 and 2009, respectively. The higher effective tax rate in 2010 was primarily due to higher profit in 2010 and the carryforward net loss for the period ended 2009.

Net income for 2010 was RMB 40.8 million or US$6.2 million, compared with net loss of RMB 19.0 million in 2009.

Basic and diluted earnings per share for 2010 was RMB 3.12 or US$ 0.47, compared with basic and diluted net loss per share of RMB 1.45 in 2009.

Net cash provided from operating activities was RMB 98.6 million or US$ 15.0 million for the year ended December 31, 2010 as compared to RMB 8.0 million for the year ended December 31, 2009. The increase was mainly due to the increase of net income and increased advance from customers.  

Cash and cash equivalents on December 31, 2010 was RMB 171.2 million or US$25.9 million, compared with RMB 26.8 million as of December 31, 2009.

2010 Highlights

Our subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Shandong Fuwei"), received the following awards and certificates, each of which, we believe, is an indication of our achievements, the quality of our products. We believe that this will make us more attractive to our potential customers and as a result a more competitive company both in the local and international markets.

In June 2010, Shandong Fuwei was designated as an A-Category taxpayer by the National Taxation Bureau and the Local Taxation Bureau of Shandong Province, and Shandong Engineering Technology Research Center by the Department of Science & Technology of Shandong Province.

In January 2011, Shandong Fuwei was granted the "Award for Cooperative and Innovative Manufacturing, Study and Research of Small and Medium Enterprise ("SME")", and the "First Award of Private SME Innovation of Shandong Province" by SME Productivity Promotion Center of Shandong Province, and SME Innovative Committee of Technological Promotion of Shandong Province. Our brand "Fuwei Films" was selected as one of the "Famous Shandong Brand" by Shandong Provincial Quality Supervision Bureau; and the "Scientific Innovative Enterprise of Shandong Province" by the Department of Science & Technology of Shandong Province.

Conference Call Information

The Company will host a teleconference on Friday, March 25, 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: 369500. The replay will be available until April 25, 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 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.

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