Fuwei Films Announces Fourth Quarter and Full Year 2015 Financial Results

BEIJING, April 8, 2016 /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, 2015.

Fuwei Films 2015 Highlights

• Net revenues of RMB248.9 million or US$38.4 million.
• Net cash used in operating activities was RMB14.0 million or US$2.2 million.
• Our gross margin was break even for the year of 2015, as compared to a gross loss margin of 6.0% in 2014.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films commented, "2015 was still a challenging year for Fuwei Films with significant competition which created oversupply of BOPET films compared to demand in the market place. As we look to 2016, we intend to capitalize upon opportunities in emerging markets and film technologies by focusing our efforts on continued innovation and R&D and are encouraged by our overseas sales volumes."

"We also previously announced the resignation of Mr. Xiuyong Zhang as Chief Financial Officer who will be replaced by the appointment of Mr. Benjie Dong as the new Chief Financial Officer effective April 1, 2016. Mr. Dong has been a Director of Shandong SNTON Group Co., Ltd. ("SNTON Group") since December 2012, and the Vice President of SNTON Group since October 2005. We would like to thank Mr. Xiuyong Zhang for his tenured service and support his decision to pursue other interests," commented Mr. Zengyong Wang.

Fourth Quarter 2015 Results

Revenues for the fourth quarter of 2015 were RMB63.7 million or US$9.8 million, compared with RMB74.6 million in the fourth quarter of 2014, a decrease of RMB10.9 million, or 14.6%. Sales volume accounted for a decrease of RMB2.5 million while the reduction of average sales price caused a decrease of RMB8.4 million due to the price reduction of main raw materials.

Sales of specialty films for the fourth quarter of 2015 were RMB18.8 million or US$2.9 million, or 29.5% of total revenues, compared with RMB22.5 million or 30.2% of total revenue in the fourth quarter of 2014. The decrease was mainly attributable to decreased selling volumes compared to those in 2014.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2015 and 2014 (amounts in thousands):

Overseas sales for the fourth quarter of 2015 were RMB10.3 million or US$1.6 million, or 16.2% of total revenues, compared with RMB9.6 million or 12.9% of total revenues in the fourth quarter of 2014. The increase in overseas sales was mainly due to increased selling volumes compared to those in 2014.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2015 and 2014 (amounts in thousands):

Gross profit for the fourth quarter of 2015 was RMB3.7 million or US$0.6 million, representing a gross margin of 5.9%, compared with a gross loss of RMB4.5 million, representing a gross loss margin of 6.0% in the fourth quarter of 2014.

Operating expenses for the fourth quarter of 2015 were RMB24.8 million or US$3.8 million compared with RMB10.6 million or US$1.7 million in the fourth quarter of 2014. This increase is mainly due to the accounting treatment that allocated certain amount of fixed overhead from the cost of goods sold to general and administrative expenses due to the fact that the Company's third production line has not been able to continue its production since April 2015, in addition to an impairment of assets incurred during 2015.

Operating loss for the fourth quarter of 2015 was RMB21.1 million US$3.2 million, compared with an operating loss of RMB15.1 million or US$2.4 million in the fourth quarter of 2014.

Net loss attributable to the Company for the fourth quarter of 2015 was RMB27.2 million or US$4.2 million, compared with net loss attributable to the Company of RMB17.3 million in the fourth quarter of 2014.

Basic and diluted loss per share was RMB2.08 or US$0.32, compared with basic and diluted loss per share of RMB1.33 or US$0.21 in the fourth quarter of 2014.

2015 Full Year Results

During the fiscal year ended December 31, 2015, net revenues were RMB248.9 million or US$38.4 million, compared to RMB284.5 million during the same period in 2014, representing a decrease of RMB35.6 million or 12.5%, mainly due to the reduction of average sales price by 13.5% caused by the decrease in the price of main raw materials. The key factors causing the revenue decrease were attributed to the reduction of average sales price which led to a decrease of RMB38.8 million but was offset by an increase in sales volume of RMB3.2 million.

In 2015, sales of specialty films were RMB73.9 million or US$11.4 million or 29.7% of our total revenues as compared to RMB79.6 million or 28.0% in 2014, which was a decrease of RMB5.7 million, or 7.2%, as compared to the same period in 2014. The decrease was largely attributable to the decrease in average selling prices by 8.9% for dry films and coated films due to the entrance of new competitors.

Overseas sales were RMB54.6 million or US$8.4 million, or 22.0% of total revenues, compared with RMB43.0 million or 15.1% of total revenues in 2014. While the decrease of average sales price caused a decrease of RMB8.0 million, this was offset by the increase of sales volume of RMB19.6 million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2015 and 2014 (amounts in thousands):

Our gross margin was relatively break even for the year of 2015, as compared to a gross loss margin of 6.0% in 2014. Gross margin increased by 6.0 percentage points compared to the same period in 2014. Our average unit sales price decreased by 13.5% compared to last year. The unit sales cost decreased by 18.4% due to the price reduction of main raw materials. Consequently, the decrease in cost of goods sold per unit exceeded that in product sales price during 2015 compared with 2014, which contributed to the increase in gross profit.

Operating expenses during the year ended December 31, 2015 were RMB61.2 million, an increase of RMB17.7 million, or 40.7%, as compared to 2014. This increase is mainly due to the accounting treatment that allocated certain amount of fixed overhead from the cost of goods sold to general and administrative expenses due to the fact that the Company's third production line has not been able to continue its production since April 2015, in addition to an impairment of assets incurred during 2015.

Total other expenses are a combination result of interest income, interest expense and other income (expense). Total other expenses during the year ended December 31, 2015 was RMB0.9 million or US$0.1 million, compared to total other expenses of RMB11.4 million in 2014. This was mainly attributed to decreases in interest expense.

Income tax expense during the year ended December 31, 2015 was RMB7.0 million or US$1.1 million compared to an income tax benefit of RMB0.74 million during 2014, which was mainly attributable to the tax effect of changes in deferred tax during 2015. We only recognized deferred tax assets for the loss of 2015 after considering the possibility of realizing the benefits under the principle of conservatism.

Net loss attributable to the Company for full year 2015 was RMB69.1 million or US$10.7 million, compared with a net loss of RMB71.3 million or US$ 11.5 million in 2014.

Net cash used in operating activities was RMB14.0 million for the year ended December 31, 2015 as compared to net cash used in operating activities of RMB18.2 million for the year ended December 31, 2014.

Cash and cash equivalents on December 31, 2015 was RMB14.4 million or US$2.2 million, compared with RMB9.0 million as of December 31, 2014.

Basic and diluted loss per share for the year ended December 31, 2015 was RMB5.29 or US$0.82.

Conference Call Information

The Company will host a teleconference on Friday, April 8, 2016 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: 13633691. The replay will be available until May 8, 2016, 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 Capital 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

Financial Tables Follow

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