BEIJING, May 22, 2014 /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 unaudited financial results for the first quarter of 2014 ended March 31, 2014.
Highlights
Mr. Xiaoan He, Chairman and CEO of Fuwei Films, commented, "The first quarter financial results continue to reflect weakened market conditions due to intensified competition which caused oversupply and excess capacity in the marketplace. However, we continue to believe that our focus on innovation will enable the Company to weather the current down cycle while increasing the ratio of high-valued films. I am pleased to announce that the preliminary test of a sample diffusion film (a type of TFT-LCD optical film) was delivered demonstrating our ability to better serve our customers through expanded product offerings. I am also pleased to announce that our controlling shareholder, a government entity, has transferred its ownership to a private company which we believe will enable our management to realign its strategic goals and will allow the Company to obtain more effective support in the fierce marketplace."
First Quarter 2014 Results
Net sales during the first quarter ended March 31, 2014 were RMB70.7 million or US$11.4 million, compared to RMB76.6 million, during the same period in 2013, representing a decrease of RMB5.9 million or 7.7%, mainly due to the reduction of average sales price by 8% arising from stronger competition in China and reduced prices of main raw materials.
Overseas sales for the first quarter 2014 were RMB10.5 million or US$1.7 million, or 14.8% of total revenues, compared with RMB12.6 million or 16.5% of total revenues in the first quarter of 2013, representing a decrease of RMB2.1 million or 16.7%. The reduction of average sales price caused a decrease of RMB0.9 million and the decrease in sales volume resulted in a decrease of RMB1.2 million. The decrease in overseas sales was mainly due to the lower demand from international markets and enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to a decrease in orders from the overseas markets compared to the same period of 2013.
The following is a breakdown of domestic versus overseas sales for the three-month periods ended March 31, 2014 and 2013 (amount in thousands except percentages):
Three-Month Period Ended | ||||||
March 31, 2014 | % of Total | March 31, 2013 | % of Total | |||
RMB | US$ | RMB | ||||
Sales in China | 60,238 | 9,690 | 85.2% | 63,979 | 83.5% | |
Sales in other countries | 10,467 | 1,684 | 14.8% | 12,598 | 16.5% | |
Total | 70,705 | 11,374 | 100.0% | 76,577 | 100.0% | |
Our gross loss was RMB0.07 million or US$0.01 million for the first quarter ended March 31, 2014, representing a gross loss margin of 0.1%, as compared to a gross loss margin of 1.6% for the same period in 2013. Our average product sales prices decreased by 8.0% compared to the same period in 2013 while the average cost of goods sold decreased by 9.0% compared to the same period last year. Consequently, the decrease in cost of goods sold exceeded that in sales revenue during the first quarter ended March 31, 2014, which contributed to the slight improvement in our gross loss margin compared with the same period in 2013.
Operating expenses for the first quarter ended March 31, 2014 were RMB10.4 million or US$1.7 million, which was RMB3.3 million, or 24.1% lower than the same period in 2013. This decrease was mainly due to decreased R&D expenditures and transportation expenses in the first quarter of 2014.
Net loss attributable to the Company during the first quarter ended March 31, 2014 was RMB13.3 million or US$2.1 million, compared to net loss attributable to the Company of RMB18.1 million during the same period in 2013, representing a decrease of RMB4.8 million for the same period in 2013 due to the factors described above.
Basic and diluted net loss per share was RMB1.02 or US$0.16, compared with basic and diluted net loss per share of RMB1.38 in the first quarter of 2013.
Total shareholders' equity was RMB447.0 million or US$71.9 million as of March 31, 2014, compared with RMB460.3 million as of December 31, 2013.
As of March 31, 2014, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.
Conference Call Information
The Company will host a teleconference on Thursday, May 22, 2014, at 9:00 a.m. 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: 13582855. The replay will be available until June 22, 2014, 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 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.
For more information, please contact:
In China:
Ms Xiaoli Yu
Investor Relations Officer
Phone: +86-133-615-59266
Email: fuweiIR@fuweifilms.com
In the U.S.:
Ms. Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: vivian.chen@grayling.com
Financial Tables to Follow | |||||
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2014 AND DECEMBER 31, 2013 (amounts in thousands except share and per share value) (Unaudited) | |||||
March 31, 2014 | December 31, 2013 | ||||
RMB | US$ | RMB | |||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 2,877 | 463 | 11,578 | ||
Restricted cash | 39,438 | 6,344 | 41,422 | ||
Accounts and bills receivable, net | 8,968 | 1,443 | 8,373 | ||
Inventories | 38,810 | 6,243 | 38,454 | ||
Advance to suppliers | 6,987 | 1,124 | 6,977 | ||
Prepayments and other receivables | 24,806 | 3,990 | 26,107 | ||
Deferred tax assets - current | 1,774 | 285 | 1,702 | ||
Total current assets | 123,660 | 19,892 | 134,613 | ||
Plant, properties and equipment, net | 514,346 | 82,740 | 524,777 | ||
Construction in progress | 366 | 59 | 632 | ||
Lease prepayments, net | 18,868 | 3,035 | 18,999 | ||
Advance to suppliers - long term, net | 2,945 | 474 | 2,134 | ||
Long-term deposit | 16,760 | 2,696 | 16,760 | ||
Other Assets | 13,170 | 2,119 | 13,244 | ||
Deferred tax assets - non current | 20,853 | 3,355 | 20,888 | ||
Total assets | 710,968 | 114,370 | 732,047 | ||
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Short-term borrowings | 105,000 | 16,891 | 105,000 | ||
Accounts payables | 33,372 | 5,368 | 33,454 | ||
Notes payable | 78,005 | 12,548 | 81,990 | ||
Advance from customers | 13,223 | 2,127 | 14,665 | ||
Accrued expenses and other payables | 6,625 | 1,066 | 6,777 | ||
Obligations under capital leases-current | 8,450 | 1,359 | 8,314 | ||
Total current liabilities | 244,675 | 39,359 | 250,200 | ||
Obligations under capital leases | 6,398 | 1,029 | 8,563 | ||
Long-term loan | 10,000 | 1,609 | 10,000 | ||
Deferred tax liabilities | 3,674 | 591 | 3,736 | ||
Total liabilities | 264,747 | 42,588 | 272,499 | ||
Equity | |||||
Shareholders' equity | |||||
Registered capital (of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding) | 13,323 | 2,143 | 13,323 | ||
Additional paid-in capital | 311,907 | 50,175 | 311,907 | ||
Statutory reserve | 37,441 | 6,023 | 37,441 | ||
Retained earnings | 83,111 | 13,370 | 96,370 | ||
Cumulative translation adjustment | 1,218 | 196 | 1,266 | ||
Total shareholders' equity | 447,000 | 71,907 | 460,307 | ||
Non-controlling interest | (779) | (125) | (759) | ||
Total equity | 446,221 | 71,782 | 459,548 | ||
Total liabilities and equity | 710,968 | 114,370 | 732,047 | ||
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2014 AND 2013 (amounts in thousands except share and per share value) (Unaudited) | |||||
The Three-Month Period Ended March 31, | |||||
2014 | 2013 | ||||
RMB | US$ | RMB | |||
Net sales | 70,705 | 11,374 | 76,577 | ||
Cost of sales | 70,774 | 11,385 | 77,768 | ||
Gross loss | (69) | (11) | (1,191) | ||
Operating expenses | |||||
Selling expenses | 3,359 | 540 | 4,345 | ||
Administrative expenses | 7,054 | 1,135 | 9,306 | ||
Total operating expenses | 10,413 | 1,675 | 13,651 | ||
Operating loss | (10,482) | (1,686) | (14,842) | ||
Other income (expense) | |||||
- Interest income | 380 | 61 | 61 | ||
- Interest expense | (3,168) | (510) | (3,217) | ||
- Others (expense) income, net | (88) | (14) | (101) | ||
Total other expense | (2,876) | (463) | (3,257) | ||
Loss before provision for income taxes | (13,358) | (2,149) | (18,099) | ||
Income tax benefit | 99 | 16 | 23 | ||
Net loss | (13,259) | (2,133) | (18,076) | ||
Net loss attributable to non-controlling interests | - | - | - | ||
Net loss attributable to the Company | (13,259) | (2,133) | (18,076) | ||
Other comprehensive income | |||||
- Foreign currency translation adjustments attributable to non-controlling interest | (20) | (3) | 2 | ||
- Foreign currency translation adjustments attributable to the Company | (48) | (8) | 11 | ||
Comprehensive (loss) income attributable to non-controlling interest | (20) | (3) | 2 | ||
Comprehensive loss attributable to the Company | (13,307) | (2,141) | (18,065) | ||
Loss per share, Basic and diluted | (1.02) | (0.16) | (1.38) | ||
Weighted average number ordinary shares, Basic and diluted | 13,062,500 | 13,062,500 | 13,062,500 | ||
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2014 AND 2013 (amounts in thousands except share and per share value) (Unaudited) | |||||
The Three-Month Period Ended March 31, | |||||
2014 | 2013 | ||||
RMB | US$ | RMB | |||
Cash flow from operating activities | |||||
Net loss | (13,259) | (2,133) | (18,076) | ||
Adjustments to reconcile net loss to net cash | |||||
used in operating activities | |||||
- Depreciation of property, plant and equipment | 12,069 | 1,941 | 12,197 | ||
- Amortization of intangible assets | 132 | 21 | 131 | ||
- Deferred income taxes | (99) | (16) | (23) | ||
- Bad debt expense | 477 | 77 | 376 | ||
Changes in operating assets and liabilities | |||||
- Accounts and bills receivable | (1,072) | (172) | 7,035 | ||
- Inventories | (355) | (57) | (14,714) | ||
- Advance to suppliers | (10) | (2) | 8,850 | ||
- Prepaid expenses and other current assets | (264) | (42) | (1,379) | ||
- Accounts payable | (82) | (13) | 1,258 | ||
- Accrued expenses and other payables | (219) | (35) | 264 | ||
- Advance from customers | (1,443) | (232) | 3,385 | ||
- Tax payable | 1,639 | 264 | (2,605) | ||
Net cash used in operating activities | (2,486) | (399) | (3,301) | ||
Cash flow from investing activities | |||||
Purchases of property, plant and equipment | (1,639) | (264) | (213) | ||
Restricted cash related to trade finance | 1,992 | 320 | (27,371) | ||
Advanced to suppliers - non current | (811) | (130) | (1,034) | ||
Amount change in construction in progress | 265 | 43 | (1,862) | ||
Net cash used in investing activities | (193) | (31) | (30,480) | ||
Cash flow from financing activities | |||||
Principal payments of short-term bank loans | - | - | - | ||
Proceeds from short-term bank loans | - | - | 2,032 | ||
Payment of capital lease obligation | (2,028) | (326) | (2,091) | ||
Change in notes payable | (3,985) | (641) | 53,773 | ||
Proceeds from sale-leaseback equipment | - | - | 5,000 | ||
Net cash (used in) provided by financing activities | (6,013) | (967) | 58,714 | ||
Effect of foreign exchange rate changes | (9) | (53) | (1) | ||
Net (decrease) increase in cash and cash equivalent | (8,701) | (1,450) | 24,932 | ||
Cash and cash equivalent | |||||
At beginning of period/year | 11,578 | 1,913 | 5,006 | ||
At end of period/year | 2,877 | 463 | 29,938 | ||
SUPPLEMENTARY DISCLOSURE: | |||||
Interest paid | 3,168 | 510 | 3,217 | ||
Income tax paid | - | - | - | ||
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: | |||||
Account payable for plant and equipment: | 8,275 | 1,331 | 5,053 | ||
Obligations for acquired equipment under capital lease: | 14,848 | 2,389 | 22,909 | ||
