Teleconference to be Held on Tuesday, March 31, 2009, at 8:00 a.m. EDT
BEIJING, March 30 /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 the financial results for the fourth quarter and full year ended December 31, 2008.
Financial Results Highlights
-- Revenues for 2008 were RMB 447.3 million (US$65.3 million), compared
with RMB 449.4 million in 2007
-- Net income for 2008 was RMB 18.2 million (US$2.6 million), compared
with RMB 47.3 million in 2007
-- Diluted EPS for 2008 was RMB 1.39 (US$0.20), compared with RMB 3.62 in
2007
-- Net cash from operations for 2008 was RMB 80.0 million (US$11.7
million), compared with RMB 82.9 million in 2007
-- Cash on hand at December 31, 2008 was RMB 15.8 million (US$2.3 million),
compared with RMB 30.9 million as of December 31, 2007
"While the global economic downturn negatively impacted our business in the fourth quarter, we managed to maintain positive cash flow in the year 2008," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "And with the recent announcement of the initial verdict of the major shareholder case in China, we believe that we can now better leverage our market-leading position to focus on R&D, the expansion of the export market and the completion of our thick-film product line while waiting for the world economy to stabilize and resume growth."
Fourth Quarter 2008 Results
Revenues were RMB 98.6 million (US$14.4 million), compared with RMB 121.5 million in the fourth quarter of 2007.
Sales of specialty films in the fourth quarter of 2008 were RMB 10.4 million (US$1.5 million), or 10.5% of total revenues, compared with RBM 42.5 million in the fourth quarter of 2007.
The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2008 and December 31, 2007 (amounts in thousands):
Three-month period ended
December December
31, 2008 % of 31, 2007 % of
RMB US$ Total RMB Total
Printing film 8,560 1,249 8.7% 23,492 19.3%
Stamping film 51,655 7,537 52.4% 19,078 15.7%
Metallization film 9,232 1,347 9.4% 8,724 7.2%
Base film for other applications 18,811 2,745 19.1% 27,752 22.8%
Specialty film 10,368 1,513 10.5% 42,480 35.0%
Total 98,626 14,390 100% 121,527 100%
Sales from overseas were RMB 9.8 million (US$1.4 million), or 9.9% of total revenues, compared with RMB 23.5 million in the fourth quarter of 2007.
The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2008 and December 31, 2007 (amounts in thousands):
Three-month period ended
December December
31, 2008 % of 31, 2007 % of
RMB US$ Total RMB Total
Sales in China 88,848 12,963 90.1% 98,006 80.7%
Sales in other countries 9,778 1,427 9.9% 23,521 19.4%
Total 98,626 14,390 100% 121,527 100%
Gross profit for the fourth quarter of 2008 was RMB 12.2 million (US$1.8 million), compared with RMB 19.3 million in the fourth quarter of 2007. Gross margin was 12.4%, compared with 16.0% in the fourth quarter of 2007. The decrease in gross profit and gross margin was primarily due to the decline in sales price caused by the financial crisis while the cost of inventory was higher.
SG&A was RMB 17.2 million (US$2.5 million), compared with RMB 12.4 million in the fourth quarter of 2007. The increase was mainly a result of increases in the costs of professional service fees related to being a public company and increased delivery fees caused by expanded sales quantity, and the increased allowances for doubt account receivable and other receivables.
Operating income was RMB 5.0 million (US$0.7 million), compared with RMB 6.9 million in the fourth quarter of 2007.
Effective tax rate was 7.6%, compared with 2.1% in the fourth quarter of 2007.
Net loss was RMB 6.5 million (US$0.9 million), compared with net income of RMB 1.0 million in the fourth quarter of 2007. Diluted net loss per share was RMB 0.50 (US$0.07), compared with diluted EPS of RMB 0.08 in the fourth quarter of 2007.
2008 Results
Revenues were RMB 447.3 million (US$65.3 million), compared with RMB 449.4 million in 2007. The decline was largely attributable to decreased revenue from specialty films. The decrease, in the first three quarters, was largely attributable to the change in demand for luxurious packaging caused by the change in regulations in the packaging design of tobaccos, which require a large quantity of our Laser holographic base film and matter film, as well as others. Moreover, the financial crisis, which began in the second half of 2008, has caused a further decline in the demand for the specialty film.
Sales of specialty films were RMB 107.4 million (US$15.7 million), or 24.0% of total revenues, compared with RMB 170.0 million in 2007.
The following is a breakdown of commodity and specialty film sales for the full-year periods ended December 31, 2008 and December 31, 2007 (amounts in thousands):
Year Ended
December December
31, 2008 % of 31, 2007 % of
RMB US$ Total RMB Total
Printing film 56,607 8,259 12.7% 83,453 18.6%
Stamping film 139,571 20,363 31.2% 94,366 21.0%
Metallization film 45,148 6,587 10.1% 30,668 6.8%
Base film for other applications 98,526 14,375 22.0% 70,925 15.8%
Specialty film 107,404 15,670 24.0% 169,961 37.8%
Total 447,255 65,253 100% 449,373 100%
Sales from overseas were RMB 58.4 million (US$8.5 million), or 13.1% of total revenues.
The following is a breakdown of domestic versus overseas sales for the full-year periods ended December 31, 2008 and December 31, 2007 (amounts in thousands):
Year Ended
December December
31, 2008 % of 31, 2007 % of
RMB US$ Total RMB Total
Sales in China 388,823 56,728 86.9% 335,213 74.6%
Sales in other countries 58,432 8,525 13.1% 114,160 25.4%
Total 447,255 65,253 100% 449,373 100%
Gross profit was RMB 70.3 million (US$10.3 million), compared with RMB 99.8 million in 2007.
Gross margin was 15.7%, compared with 22.2% in 2007. The decrease in gross profit and margin was mainly due to the decline in sales quantity of specialty films and a sharp decline in sale prices as a result of the global financial crisis.
SG&A was RMB 45.7 million (US$6.7 million), compared with RMB 35.6 million in 2007. The increase was mainly a result of increases in the costs of professional service fees related to being a public company and increased delivery fees caused by expanded sales quantity, and the increased allowances for doubt account receivable and other receivables.
Operating income was RMB 24.6 million (US$3.6 million), compared with RMB 64.3 million in 2007.
Effective tax rate was 14.0%, compared with 8.7% in 2007. The higher effective tax rates were primarily attributable to the fact that our operating subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"), was subject to the 15.0% income tax rate in 2008 pursuant to the prevailing PRC Income Tax Law, while such rate was 7.5% in 2007.
Net income was RMB 18.2 million (US$2.7 million), compared with RMB 47.3 million in 2007.
Diluted EPS was RMB 1.39 (US$0.20), compared with RMB 3.62 in 2007.
Net cash provided by operating activities was RMB 80.0 million (US$11.7 million), compared with RMB 82.9 million in 2007.
Total shareholders' equity increased to RMB 530.6 million (US$77.4 million) as of December 31, 2008.
As of December 31, 2008, the Company had 13,062,500 basic and diluted total common shares outstanding.
Recent Events
On March 10, 2009, the Company announced the initial verdict issued by the Jinan Intermediate People's Court in the city of Jinan, Shandong Province, concerning the Company's three major shareholders. Each of them was found guilty of the crime of misappropriation of state-owned assets relating to the tens of millions of RMBs' worth of assets. All of the personal property of the three individuals will be confiscated. They own an aggregate of approximately 65% of the ordinary shares of the Company by their holdings of Apex Glory and Easebright Investments. None of these individuals is currently involved in Fuwei's day-to-day operations. They have challenged and already appealed the verdict.
On February 11, 2009, the Company announced that Fuwei Films Shandong, the Company's wholly owned operating subsidiary, received the "High-and-New Tech Enterprise" ("HNTE") designation from Shandong Province. As a new HNTE, Fuwei Shandong is entitled to a preferred tax rate of 15%, retroactive as of January 1, 2008 until the expiration of the designation in 2011.
On January 5, 2009, the Company announced that Fuwei Shandong received an RMB 25 million (US$3.65 million) interest-free loan from the Weifang City Hi & New Technology Project Industrial Development Fund ("IDF") to support the Company's R&D activities. So far RMB 5 million (US$0.73 million) of the RMB 25 million (US$3.65 million) has been disbursed to Fuwei as an interest free loan. Fuwei will obtain the remaining RMB 20 million (US$2.92 million) according to the usage stage plan of the fund. Fuwei will repay this RMB 5 million loan on December 2011 when it expires.
Late last year, the Company announced that it had received the final results of the BOPET film-related anti-dumping investigation conducted by the U.S. Department of Commerce. Fuwei received the lowest anti-dumping duty rate of 3.49% among the five Chinese BOPET film manufacturers that received a duty. The average rate for other Chinese companies has been assessed at 76.72% in connection with this investigation.
Conference Call Information
The Company will host a teleconference on Tuesday, March 31, 2009, at 8:00 a.m. EDT, or 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 the Fuwei's Website at http://www.fuweiholdings.com . Please visit the Web site 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
Conference ID: 318483
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 Films (Shandong) Co., Ltd. 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.
Financial Tables to Follow
FUWEI FILMS (HOLDINGS) CO. LTD and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2007 and 2008
(amounts in thousands, except share and per share data)
2007 2008
RMB RMB US$
Assets
Current assets
Cash 30,909 15,823 2,308
Restricted cash 64,909 10,411 1,519
Accounts receivable, net 58,195 38,579 5,628
Inventories 41,670 30,589 4,463
Advance to suppliers 13,538 6,846 999
Prepayments and other receivables 2,622 1,857 271
Total current assets 211,842 104,105 15,188
Property, plant and equipment, net 228,309 259,235 37,821
Construction in progress 265,253 319,408 46,600
Lease prepayments 22,290 22,507 3,284
Advanced to suppliers - Long Term -- 4,308 629
Intangible asset, net 36 -- --
Goodwill 10,276 10,276 1,499
Deposit -- 17,613 2,570
Deferred income tax assets 969 2,452 358
Total assets 738,975 739,904 107,949
Liabilities
Current liabilities
Short-term bank loans 188,027 164,764 24,038
Accounts payable 19,609 23,301 3,399
Advance from customers 10,957 8,781 1,281
Accrued expenses and other payables 7,587 7,460 1,089
Deferred income tax liabilities 265 -- --
Total current liabilities 226,445 204,305 29,807
Long-term loan -- 5,000 729
Total liabilities 226,445 209,305 30,537
Shareholders' equity
Ordinary shares of US$0.129752 par
value; 20,000,000 shares authorized;
and 13,062,500 issued and
outstanding as of December 31, 2006
and 2007, respectively 13,323 13,323 1,944
Additional paid-in capital 311,907 311,907 45,506
Statutory reserve 26,924 29,338 4,280
Retained earnings 159,228 174,970 25,527
Accumulated other comprehensive
income 1,148 1,061 155
Total shareholders' equity 512,530 530,599 77,412
Total liabilities and shareholders'
equity 739,975 739,904 107,949
FUWEI FILMS (HOLDINGS) CO. LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the years ended December 31, 2006, 2007 and 2008
(amounts in thousands, except share and per share data)
2006 2007 2008
RMB RMB RMB US$
Revenues, net 436,884 449,373 447,255 65,253
Cost of goods sold (334,341) (349,531) (376,923) (54,992)
Gross profit 102,543 99,842 70,332 10,261
Operating expenses
- Distribution expenses (16,483) (15,061) (15,604) (2,277)
- Administrative expenses (8,043) (20,515) (30,124) (4,395)
Total operating expenses (24,526) (35,576) (45,728) (6,672)
Operating income 78,017 64,266 24,604 3,590
Other income/(expense)
- Interest income 43 589 688 100
- Interest expense (12,884) (13,233) (3,995) (583)
- Sales of scrap materials 3,639
- Others, net (393) 319 (174) (25)
Total other
income/(expense) (9,595) (12,325) (3,481) (508)
Income before income tax
benefit/(expense) 68,422 51,941 21,123 3,082
Income tax
benefit/(expense) (757) (4,681) (2,966) (433)
Net income 67,665 47,260 18,157 2,649
Other comprehensive income
- Foreign currency
translation adjustments 53 (637) (87) (13)
Comprehensive income 67,718 46,623 18,070 2,636
Earnings per share
- Basic 61.46 3.62 1.39 0.20
- Diluted 61.37 3.62 1.39 0.20
Weighted average number of
ordinary shares
- Basic 1,101,031 13,062,500 13,062,500 13,062,500
- Diluted 1,102,488 13,062,500 13,062,500 13,062,500
FUWEI FILMS (HOLDINGS) CO. LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2006, 2007 and 2008
(amounts in thousands)
2006 2007 2008
RMB RMB RMB US$
Cash flow from operating activities
Net income 67,665 47,260 18,157 2,649
Adjustments to reconcile net income
to net cash
(used in)/provided by operating
activities
- Depreciation of property, plant
and equipment 23,425 23,217 25,168 3,672
- Amortization of intangible assets 72 73 490 71
- Lease prepayments charged to
expense 724 741 -- --
- Deferred income taxes 757 152 -- --
- Bad debt expense/(recovery) (1,143) 1,772 4,818 703
- Foreign currency exchange loss 53 -- -- --
Changes in operating assets and
liabilities
- Accounts receivable (28,258) 17,335 18,186 2,653
- Inventories 1,104 (19,659) 11,080 1,617
- Advance to suppliers -- 2,384 348
- Prepaid expenses and other current
assets (8,220) 6,698 220 32
- Accounts payable 2,196 6,824 3,691 539
- Accrued expenses and other
payables 117 (1,557) (2,163) (316)
- Advance from customers -- -- (2,176) (317)
- Tax payable -- -- 172 25
Net cash provided by operating
activities 58,492 82,856 80,027 11,675
Cash flow from investing activities
Purchases of property, plant and
equipment (37,526) (590) (56,093) (8,184)
Restricted cash related to trade
finance (3,311) (61,598) 54,498 7,951
Payment of land use rights (2,649) (184,600) (54,155) (7,901)
Deposits for purchase -- -- (21,000) (3,064)
Proceeds from sale of property,
plant and equipment 7 -- -- --
Net cash used in investing
activities (43,479) (246,787) (76,750) (11,198)
Cash flow from financing activities
Net proceeds from issuance of share
capital 235,867 -- -- --
Principal payments of short-term
bank loans (18,368) (51,650) (23,262) (3,394)
Proceeds from short-term bank loans 10,000 -- 5,000 729
Net cash (used in)/provided by
financing activities (227,499) (51,650) (18,262) (2,664)
Effect of foreign exchange rate
changes -- (3,448) (104) (15)
Net increase/ (decrease) in cash 242,512 (219,029) (15,086) (2,201)
Cash
At beginning of the year 7,427 249,939 30,909 4,509
At end of the year 249,939 30,909 15,823 2,308
Supplemental disclosure of cash flow
information
Cash paid during the year for
interest expense 15,739 12,921 11,705 1,708
Cash paid during the year for income
tax paid -- -- 2,996 433
