Fuwei Films Announces Fourth Quarter and Full Year 2014 Financial Results

BEIJING, April 10, 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 financial results for the fourth quarter and full year ended December 31, 2014.

Fuwei Films2014 Highlights

• Net revenues of RMB284.5 million or US$45.8 million.
• Net cash used in operating activities was RMB18.2 million or US$2.9 million.
• Successful acceptance by four customers of sample diffusion film (a type of TFT-LCD optical film) from the third production line after being delivered for testing.
• Fuwei Films awarded "Shandong Famous Brand" designation by Shandong Provincial Quality Supervision Bureau for an additional five years.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films commented, "2014 was still a challenging year for Fuwei Films with increased competition and excessive capacity resulting in significant reduction of selling prices. As we look to 2015, we will seek to capitalize upon opportunities in emerging markets and film technologies by focusing efforts on continued innovation and R&D."

Fourth Quarter 2014 Results

Revenues for the fourth quarter of 2014 were RMB74.6million or US$12.0 million, compared with RMB75.1million in the fourth quarter of 2013, a decrease of RMB0.5 million, or 0.7%, mainly due to the decrease in selling prices compared to the same period in 2013 arising from stronger competition and excess capacity in China and overseas.

Sales of specialty films for the fourth quarter of 2014 were RMB22.5million or US$3.6 million, or 30.2% of total revenues, compared with RMB19.1 million or 25.5% of total revenue in the fourth quarter of 2013. The increase was mainly attributable to increased selling volumes compared to those in 2013.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2014 and 2013 (amounts in thousands):

Overseas sales for the fourth quarter of 2014 were RMB9.6 million or US$1.6 million, or 12.9% of total revenues, compared with RMB7.0 million or 9.3% of total revenues in the fourth quarter of 2013. The increase in overseas sales was mainly due to increased selling volumes compared to those in 2013.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2014 and 2013 (amounts in thousands):

Gross loss for the fourth quarter of 2014 was RMB 4.5 million or US$0.7 million, compared with a gross loss of RMB2.1 million in the fourth quarter of 2013. Gross loss margin was 6.0%, compared with gross loss margin of 2.8% in the fourth quarter of 2013.

Operating expenses for the fourth quarter of 2014 was RMB10.6 million or US$1.7 million compared with RMB12.1 million in the fourth quarter of 2013. This decrease was mainly due to the reduction of freight and the decrease in research and development expenses.

Operating loss for the fourth quarter of 2014 was RMB15.1million US$2.4 million, compared with operating loss of RMB14.2 million in the fourth quarter of 2013.

Net loss attributable to the Company for the fourth quarter of 2014 was RMB17.3 million or US$2.8 million, compared with net income attributable to the Company of RMB 0.5 million in the fourth quarter of 2013. Basic and diluted loss per share was RMB1.33 or US$0.21, compared with basic and diluted earnings per share of RMB0.04 in the fourth quarter of 2013.

2014 Full Year Results

During the fiscal year ended December 31, 2014, net revenues were RMB284.5 million (US$45.8 million), compared to RMB305.0 million during the same period in 2013, representing a decrease of RMB20.5 million or 6.7%, mainly due to the reduction of average sales price by 8.8% caused by oversupply arising from stronger competition in China and the decrease in the price of main raw materials.

In 2014, sales of specialty films were RMB79.6 million or US$12.8 million representing 28.0% of our total revenues as compared to RMB89.4 million or 29.3% in 2013, which was a decrease of RMB9.8 million, or 11.0%, as compared to the same period in 2013. The decrease in specialty films revenue resulted from the reduction of average sales price which caused a decrease of RMB4.6 million and a decrease in sales volume which contributed to a decrease of RMB5.2 million.

The Company's revenue by significant types of films produced for the periods ended December 31, 2014 and 2013was as follows (amounts in thousands):

Overseas sales were RMB43.0 million or US$6.9 million, or 15.1% of total revenues, compared with RMB41.9 million or 13.7% of total revenues in 2013. The increase in international sales was largely driven by an increase in sales volume of which contributed to revenues of RMB7.7 million and partially offset by a decrease in average sales price which affected revenues by RMB6.6million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2014 and 2013 (amounts in thousands):

Our gross loss was RMB17.2 million or US$2.8 million for the year of 2014, representing a gross loss margin of 6.0%, as compared to a gross loss margin of 5.1% in 2013. Gross loss margin increased by 0.9 percentage points compared to the same period in 2013. Our average unit sales price decreased by 8.8% compared to last year while the unit sales cost decreased by 8% due to the price reduction of main raw materials. Consequently, the decrease in product sales price exceeded that in cost of goods sold per unit during 2014 compared with 2013, which contributed to the decrease in gross profit.

Our operating expenses during the year ended December 31, 2014 were RMB43.5 million, a decrease of RMB5.5 million, or 11.2%, as compared to 2013. The sales expenses decreased by RMB1.7 million mainly due to the reduction of freight. The administrative expense reduced by 3.8 million mainly attributable to the decrease in research and development expenses.

Total other expense is a combination result of interest income, interest expense and other income (expense). Total other expense during the year ended December 31, 2014 was RMB11.4 million or US$1.8 million, compared to total other income of RMB4.6 million in 2013. Total other expense of 2014 increased comparing to that of 2013, which mainly attributed to increased interest expense. Interest expense totaled RMB12.5 million or US$2.0 million during 2014, RMB2.4 million or 23.8% higher than that in 2013, which was mainly due to higher interest payment associated with increased loans from related party.

Income tax benefit during the year ended December 31, 2014 was RMB0.74 million or US$0.119 million compared to an income tax benefit of RMB10.0 million during 2013, which was mainly attributable to tax effect of changes in deferred tax during 2014.

Net loss attributable to the Company for full year 2014 was RMB71.3 million or US$11.5 million, compared with net loss of RMB59.0 million in 2013.

Net cash used in operating activities was RMB18.2 million for the year ended December 31, 2014 as compared to net cash provided by operating activities of RMB3.1 million for the year ended December 31, 2013.

Cash and cash equivalents on December 31, 2014 was RMB9.0 million or US$1.5 million, compared with RMB11.6million as of December 31, 2013.

Conference Call Information

The Company will host a teleconference on Friday, April 10, 2015 at 9:00 am 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: 13604837. The replay will be available until May 10, 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'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; significant competition in the BOPET film industry, especially the significant oversupply of BOPET films resulting from the rapid growth of the Chinese BOPET industry capacity, changes in the international market and trade barriers, especially the adverse impact of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films originating from the People's Republic of China ("China") conducted by certain main importing countries; fluctuations of RMB exchange rate, the reduce in demand for the Company's products or the loss of main customers which may result in the decrease of sales, and negatively influencing the Company's financial performance, uncertainty as to the future profitability, uncertainty as to the Company's ability to successfully obtain additional funds to meet the working capital needs of the new BOPET production line, uncertainty as to the Company's ability to continuously develop new BOPET film products to be produced by the third production line and keep up with changes in BOPET film technology, risks associated with possible defects and errors in its products including complaints and claims from clients, uncertainty as to its ability to protect and enforce its intellectual property rights, uncertainty as to its ability to attract and retain qualified executives and personnel, and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in light of the volatility in the prices of petroleum products in recent years, instability of power and energy supply, and the uncertainty regarding the future operation of the Company in connection with the changes in the labor law in China, the measures taken by the Chinese government to save energy and reduce emissions, and the complaints from nearby residents and local government about the noise caused by our production as well as the uncertainty of the impact of major shareholder transfer that have substantial influence over the Company and the Company's business operation including possible overlap of our BOPET products, customers and market orientation with an BOPET film manufacturer, which is controlled by the same individual who has control over the shares of our major shareholder. 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 Manager
Phone: +86-133-615-59266
Email: fuweiIR@fuweifilms.com

In the U.S.:

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

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