SOURCE: FuWei Films

April 22, 2010 07:00 ET

Fuwei Films Announces Fourth Quarter & Full Year 2009 Financial Results

Teleconference to Be Held on April 22, 2010, at 8:00 a.m. EDT

BEIJING--(Marketwire - April 22, 2010) - 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, 2009.

Financial Results 2009 Highlights

 -- Revenues for 2009 were RMB 320.7 million (US$47.0 million), compared
    with RMB 447.3 million in 2008

 -- Net loss for 2009 was RMB 19.0 million (US$2.8 million), compared with
    net income of RMB 18.2 million in 2008

 -- Basic and diluted loss per share for 2009 was RMB 1.45 (US$0.21),
    compared with basic and diluted earnings per share RMB 1.39 in 2008

 -- Cash on hand at December 31, 2009 was RMB 26.8 million (US$3.9
    million), compared with RMB 15.8 million as of December 31, 2008

 -- Sales of specialty films in the fourth quarter of 2009 were RMB 12.2
    million (US$1.8 million), or 14.5% of total revenues, compared with
    RBM 10.4 million in the fourth quarter of 2008.

"2009 was a challenging year for Fuwei but we are beginning to see new orders from our customers including orders for some of our specialty film products, which increase our confidence in R&D. Due to the lingering effects of the downturn, our financial results in 2009 suffered in comparison to the results in the prior year," said Mr. Xiaoan He, Chairman and CEO of Fuwei. "In 2010, we are better positioned now to leverage our market leadership and competitive advantages by focusing on our R&D, expanding the export market now that the world economy appears to be stabilizing. We expect the year 2010 to be a better year."

Fourth Quarter 2009 Results

Revenues were RMB 84.0 million (US$12.3 million), compared with RMB 98.6million in the fourth quarter of 2008.

Sales of specialty films in the fourth quarter of 2009 were RMB 12.2 million (US$1.8 million), or 14.5% of total revenues, compared with RMB 10.4 million in the fourth quarter of 2008.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2009 and December 31, 2008 (amounts in thousands):

                                      Three months period ended
                           ------------------------------------------------
                           December 31, 2009              December 31, 2008
                           -----------------             ------------------
                             RMB      US$    % of Total    RMB   % of Total

Printing film                 8,307    1,217       9.9%    8,560       8.7%
Stamping film                52,493    7,689      62.5%   51,655      52.4%
Metallization film            6,629      971       7.9%    9,232       9.4%
Specialty film               12,187    1,785      14.5%   10,368      10.5%
Base film for other
 applications                 4,424      648       5.3%   18,811      19.1%

  Total                      84,040   12,310       100%   98,626       100%

Sales from overseas were RMB11.1million (US$1.6 million), or 13.4% of total revenues, compared with RMB 9.8 million in the fourth quarter of 2008.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2009 and December 31, 2008 (amounts in thousands):

                                       Three-month period ended
                           ------------------------------------------------
                           December 31, 2009             December 31, 2008
                           -----------------            -------------------
                             RMB      US$    % of Total    RMB   % of Total
Sales in China               71,983   10,544      88.6%   88,848      90.1%
Sales in other countries     11,150    1,633      13.4%    9,778       9.9%
                          --------- -------- ---------  -------- ---------

Total                        83,133   12,177       100%   98,626       100%

Gross profit for the fourth quarter of 2009 was RMB 10.4 million (US$1.5 million), compared with RMB 12.2 million in the fourth quarter of 2008. Gross margin was 12.4%, the same as 2008. The decrease in gross profit was primarily due to the decline in sales price.

Selling, general and administrative expense (SG&A) was RMB 10.4 million (US$1.5 million), compared with RMB 17.2 million in the fourth quarter of 2008. The decrease was mainly a result of decreases of professional service fees related to being a public company and decreased allowances for doubtful account receivable and other receivables.

Operating loss was RMB 8000 (US$1200), compared with operating loss of RMB 5.0 million in the fourth quarter of 2008.

Net income was RMB 0.5 million (US$0.08 million), compared with net loss of RMB 6.5 million in the fourth quarter of 2008. Basic and diluted EPS was RMB 0.04 (US$0.01) in the fourth quarter 2009, compared with basic and diluted net loss per share of RMB 0.50 in the fourth quarter of 2008.

2009 Full Year Results

During the fiscal year ended December 31, 2009, our revenues were RMB 320.7 million (US$47.0 million), which is a decrease of RMB 126.5 million or 28.3%, as compared to the same period for 2008. The decrease in sales is mainly due to the decrease of average unit sales price and the closing of the leased production line.

In 2009, sales of special films were RMB 34.0 million ?US$5.0 million? and 10.6% of our total revenues as compared to RMB 107.4 million and 24.0% in 2008, which is a decrease of RMB 73.0 million, or 68.0%, as compared to the same period in 2008.

The following is a breakdown of commodity and specialty film sales for the full-year periods ended December 31, 2009 and December 31, 2008 (amounts in thousands):

                                             Year ended
                           ------------------------------------------------
                           December 31, 2009             December 31, 2008
                           -----------------             ------------------
                             RMB      US$    % of Total    RMB   % of Total

Printing film                35,231    5,161      11.0%   56,607      12.7%
Stamping film               174,356   25,539      54.4%  139,571      31.2%
Metallization film           35,138    5,147      10.9%   45,148      10.1%
Specialty film               34,004    4,981      10.6%   98,526      22.0%
Base film for other
 applications                42,002    6,152      13.1%  107,404      24.0%

  Total                     320,731   46,980       100%  447,255       100%

Sales from overseas were RMB 35.6million (US$5.2million), or 11.1% of total revenues.

The following is a breakdown of domestic versus overseas sales for the full-year periods ended December 31, 2009 and December 31, 2008 (amounts in thousands):

                                             Year ended
                           ------------------------------------------------
                           December 31, 2009             December 31, 2008
                           -----------------             ------------------
                             RMB      US$    % of Total   RMB    % of Total
Sales in China              285,120   41,764      88.9%  388,823      86.9%
Sales in other countries     35,611    5,216      11.1%   58,432      13.1%
                          --------- -------- ---------  -------- ---------

Total                       320,731   46,980       100%  447,255       100%
                           ======== ======== =========  ======== =========

Gross profit during the year ended December 31, 2009 was RMB 24.6 million ?US$3.6 million?representing a gross margin of 7.7%, compared to RMB 70.3 million or 15.7% for the year ended December 31, 2008. The decrease in gross profit margin was mainly due to the decline in sales quantity of specialty films which further lead to a sharp decline in average unit sale prices.

SG&A was RMB 41.2 million (US$6.0 million), compared with RMB 45.7 million in 2008. The decrease was mainly the result of increases of professional service fees related to being a public company and decreased allowances for doubtful account receivable and other receivables.

Operating loss was RMB 16.5 million (US$2.4 million), compared with operating income of RMB 24.6 million in 2008.

The effective tax rate was 17.7% and 14.0% in 2009 and 2008 respectively. The lower effective tax rate in 2009 was primarily due to the net loss for the period ended 2009, and as a result no income tax was incurred and there was only deferred tax expense.


Net loss for 2009 was RMB 19.0 million (US$2.8 million), compared with RMB 18.2 million in 2008.

Basic and diluted net loss per share for 2009 was RMB 1.45 (US$0.21), compared with basic and diluted EPS RMB 1.39 in 2008.

Net cash from operating activities was RMB 9.9 million (US$1.5 million) for the year ended December 31, 2009 as compared to RMB 80.0 million for the year ended December 31, 2008. The decrease was mainly due to net loss and increased inventories.

Total shareholders' equity decreased to RMB 511.8 million (US$75.0 million) as of December 31, 2008?which was RMB 530.6 million.

As of December 31, 2009, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.

2009 Events

On November 12? 2009? the Company announced that it became aware of the final verdict issued by the Supreme People's Court of Shandong Province, concerning the Company's three major shareholders, Mr. Jun Yin, Mr. Tongju Zhou and Mr. Duo Wang. The Supreme People's Court upheld the initial verdict issued by the Intermediate court in March 2009. The March 2009 initial verdict sentenced Mr. Yin to death, with a stay of execution for two years; the other two defendants, Mr. Zhou and Mr. Wang, each received life imprisonment; all of the personal property of the three individuals will be confiscated. The three individuals appealed the initial verdict to the Supreme People's Court of Shandong Province in March 2009.

Fuwei was honored in May and August 2009 by several awards for Technological Innovation in Shandong Province by the China Plastic and Packaging Association.

On April 23, 2009, Fuwei Films USA, LLC was set up in South Carolina and co-invested by Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management Co., Ltd. Fuwei Films USA, LLC has a registered capital of US$10,000 and total investment amount of US$100,000. Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management Co., Ltd. own 60% and 40% of the total shares of Fuwei Films USA, LLC, respectively. As of December 31, 2009 the sale revenue of the Fuwei USA was $449,830.

On February 11, 2009, the Company announced that Fuwei Films (Shandong) Co., Ltd. ("Fuwei 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 December 3, 2009, the Company announced that Fuwei Shandong recently received RMB 10 million financial support in the form of a loan from the local Chinese government. This financial support is an eight year long-term loan with an interest rate of 5.346% and RMB 3.3 million payments of equal installments within 3 years prior to the expiration of the loan.

Conference Call Information

The Company will host a teleconference on Thursday, April 22, 2010, at 8:00 a.m. EDT or 8:00 p.m. Beijing time to discuss the year end 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 will be played on webcast simultaneously 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 and 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

Fuwei conducts its business through its wholly owned subsidiary, Fuwei Films 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.

             FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                     As of December 31, 2008 and 2009
          (amounts in thousands, except share and per share data)



                                              2008           2009
                                           ---------- ---------------------
                                                RMB        RMB        US$
                  ASSETS
Current assets
Cash and cash equivalents                      15,823     26,804      3,926
Restricted cash                                10,411     12,541      1,837
Accounts receivable, net                       38,579     28,785      4,216
Inventories, net                               30,589     45,039      6,597
Advance to suppliers                            6,846      3,956        579
Prepayments and other receivables               1,857        957        140
Deferred tax assets - current                     457      1,198        175
                                           ---------- ---------- ----------
Total current assets                          104,562    119,282     17,470
                                           ---------- ---------- ----------

Plant, properties and equipment, net          259,235    318,600     46,668
Construction in progress                      319,408    237,118     34,732
Lease prepayments, net                         22,507     21,548      3,156
Advanced to suppliers - long term               4,308      2,367        347
Goodwill                                       10,276     10,276      1,505
Deposit                                        17,613     21,000      3,076
Deferred tax assets - non current               1,995      5,318        779

Total assets                                  739,904    735,509    107,733


      LIABILITIES AND EQUITY
Current liabilities
Short-term bank loans                         164,764    153,179     22,435
Accounts payables                              23,301     25,898      3,794
Advance from customers                          8,781     12,608      1,847
Accrued expenses and other payables             7,460      6,981      1,023
                                              204,305    198,666     29,099

  Long-term loans                               5,000     25,000      3,662

Total liabilities                             209,305    223,666     32,761

Commitments and contingencies                       -          -          -

Equity
Shareholders' equity
Common Stock (of US$0.129752 par value;
 20,000,000 shares authorized; 13,062,500
 issued and outstanding as of December 31,
 2008 and 2009, respectively)                  13,323     13,323      1,952
Additional paid-in capital                    311,907    311,907     45,687
Statutory reserve                              29,338     29,338      4,297
Retained earnings                             174,970    156,006     22,851
Accumulated other comprehensive income          1,061        993        145
Total shareholders' equity                    530,599    511,567     74,932
Non-controlling interest                            -        276         40
Total equity                                  530,599    511,843     74,972
Total liabilities and equity                  739,904    735,509    107,733




             FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
           For the years ended December 31, 2007, 2008 and 2009
          (amounts in thousands, except share and per share data)



                               2007        2008              2009
                            ----------  ----------  ----------------------
                                RMB         RMB         RMB         US$

Revenues, net                  449,373     447,255     320,731      46,980
Cost of goods sold            (349,531)   (376,923)   (296,118)    (43,375)
                            ----------  ----------  ----------  ----------

Gross profit                    99,842      70,332      24,612       3,605
                            ----------  ----------  ----------  ----------

Operating expenses
- Distribution expenses        (15,061)    (15,604)    (15,227)     (2,230)
- Administrative expenses      (20,515)    (30,124)    (25,932)     (3,798)
                            ----------  ----------  ----------  ----------

Total operating expenses       (35,576)    (45,728)    (41,159)     (6,028)
                            ----------  ----------  ----------  ----------

Operating income/(loss)         64,266      24,604     (16,547)     (2,423)
                            ----------  ----------  ----------  ----------

Other income/(expense)
- Interest income                  589         688         154          23
- Interest expense             (13,233)     (3,995)     (6,540)       (958)
- Others income /
 (expense), net                    319        (174)        (92)        (13)
                            ----------  ----------  ----------  ----------

Total other
 income/(expense)              (12,325)     (3,481)     (6,478)       (948)
                            ----------  ----------  ----------  ----------

Income before income tax
 benefit/(expense)              51,941      21,123     (23,024)     (3,371)

Income tax
 benefit/(expense)              (4,681)     (2,966)      4,064         595
                            ----------  ----------  ----------  ----------

Net Income/(loss)               47,260      18,157     (18,960)     (2,776)
                            ----------  ----------  ----------  ----------

Non-controlling interest             -           -           3           0
                            ----------  ----------  ----------  ----------

Net income/(loss)
 attributable to the
 Company                        47,260      18,157     (18,963)     (2,778)

Other comprehensive
 income/(loss)
- Foreign currency
 translation adjustments          (637)        (87)        (68)        (10)

                            ----------  ----------  ----------  ----------
Comprehensive income/(loss)     46,623      18,070     (19,032)     (2,786)
                            ==========  ==========  ==========  ==========

Earnings (loss) per share,
 Basic and diluted                3.62        1.39       (1.45)      (0.21)

Weighted average number
 ordinary shares,
Basic and diluted           13,062,500  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, 2007, 2008 and 2009
          (amounts in thousands, except share and per share data)



                               2007        2008              2009
                            ----------  ----------  ----------------------
                                RMB         RMB         RMB         US$
Cash flow from operating
 activities
Net income /(loss)              47,260      18,157     (18,960)     (2,776)
Adjustments to reconcile
 net income /(loss) to net
 cash (used in)/provided by
 operating activities
- Depreciation of property,
   plant and equipment          23,217      25,168      35,464       5,195
- Amortization of intangible
   assets                           73         490         889         130
- Lease prepayments charged
   to expense                      741           -           -           -
- Deferred income taxes            152      (1,748)     (4,064)       (595)
- Bad debt expense/
   (recovery)                    1,772       4,818         697         102
- Inventory provision                -           -       4,242         621

Changes in operating assets
 and liabilities
- Accounts receivable           17,335      18,186      11,609       1,700
- Inventories                  (19,659)     11,080     (18,693)     (2,742)
- Advance to suppliers               -       2,384       4,831         708
- Prepaid expenses and
   other current assets          6,698          89      (4,929)       (722)
- Accounts payable               6,824       3,691      (4,475)       (655)
- Accrued expenses and other
   payables                     (1,557)       (284)      1,902         279
- Advance from customers                    (2,176)      3,827         561
- Tax payable                        -         172      (2,411)       (353)
                            ----------  ----------  ----------  ----------

Net cash provided by
 operating activities           82,856      80,027       9,929       1,453

Cash flow from investing
 activities
Purchases of property,
 plant and equipment              (590)    (56,093)    (87,758)    (12,847)
Restricted cash related to
 trade finance                 (61,598)     54,498      (2,130)       (312)
Addition to construction in
 progress                     (184,600)    (54,155)     82,290      12,054
Deposits for purchase                -     (21,000)          -           -
                            ----------  ----------  ----------  ----------

Net cash used in investing
 activities                   (246,787)    (76,750)     (7,599)     (1,112)

Cash flow from financing
 activities
Principal payments of
 short-term bank loans         (51,650)    (23,262)    (11,585)     (1,697)
Proceeds from short-term
 bank loans                          -       5,000      20,000       2,930
                            ----------  ----------  ----------  ----------

Net cash used in
 /(provided) by financing
 activities                    (51,650)    (18,262)      8,415       1,233
                            ----------  ----------  ----------  ----------

Effect of foreign exchange
 rate changes                   (3,448)       (104)        236          44
Net increase (decrease) in
 cash and cash equivalent     (219,029)    (15,086)     10,981       1,618
                            ----------  ----------  ----------  ----------

Cash and cash equivalent
At beginning of the year       249,939      30,909      15,823       2,308
At end of the year              30,909      15,823      26,804       3,926
                            ==========  ==========  ==========  ==========
SUPPLEMENTARY DISCLOSURE:
Interest paid                   12,921      11,705       8,399       1,230
                            ==========  ==========  ==========  ==========
Income tax paid                      -       2,966           -           -
                            ==========  ==========  ==========  ==========
SUPPLEMENTARY SCHEDULE OF
 NONCASH INVESTING AND
 FINANCIAL ACTIVITIES:
During the year ended
 December 31, 2009, the
 Company acquired equipment
 by incurring accounts
 payable in the amount of            -           -       7,071       1,035
                            ==========  ==========  ==========  ==========

Contact Information

  • For more information, please contact:
    In China:

    Maggie Huang
    Investor Relations Manager
    Phone: +86-10-685-226-12
    Email: fuweiIR@fuweifilms.com

    In the U.S.:

    Leslie Wolf-Creutzfeldt
    Investor Relations
    Grayling
    Phone: +1-646-284-9472
    Email: lwolf-creutzfeldt@hfgcg.com