BEIJING, August 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 second quarter ended June 30, 2014.
Highlights
Mr. Xiaoan He, Chairman and CEO of Fuwei Films, commented, "The second quarter financial results continue to reflect weakened market conditions due to intense competition which caused oversupply and excess capacity in the marketplace. However, I am pleased to announce that a sample diffusion film (a type of TFT-LCD optical film) was preliminarily accepted by a new customer after being delivered for testing. We expect to supply small batches of product according to this customer's purchase order. In addition, a sample base film for solar backsheets has been delivered to a customer for initial testing. This demonstrates our ability to better serve our customers by expanding our product offering to the market and we will seek to capitalize upon opportunities in emerging markets with expanded end user applications by focusing our efforts on continued innovation and R&D. We believe that with the support of the new controlling shareholder, the Company will be in a better position to adjust to various challenges and to obtain better support in the fierce marketplace."
Second Quarter of 2014 Financial Results
Net sales during the second quarter ended June 30, 2014 were RMB70.0 million or US$11.3 million, compared to RMB77.4 million during the same period in 2013, representing a decrease of RMB7.4 million or 9.6%, mainly due to the reduction of average sales price by 14.0% arising from stronger competition in China. Although the reduction of average sales price caused a decrease of RMB11.3 million, this was partially offset by an increase in sales volume of RMB3.9 million.
Overseas sales were RMB11.1 million or US$1.8 million, or 15.9% of total revenues, compared with RMB9.5 million or 12.3% of total revenues in the second quarter of 2013. The increase in overseas sales was primarily due to the increase in volume, which accounted for RMB3.3 million, although this was partially offset by the decrease of RMB1.7 million in average sales price.
The following is a breakdown of domestic versus overseas sales for the three-month periods ended June 30, 2014 and 2013 (amounts in thousands):
Three-Month Period Ended | % of Total | Three-Month Period Ended | % of Total | |||
RMB | US$ | RMB | ||||
Sales in China | 58,873 | 9,490 | 84.1% | 67,906 | 87.7% | |
Sales in other countries | 11,111 | 1,791 | 15.9% | 9,495 | 12.3% | |
69,984 | 11,281 | 100.0% | 77,401 | 100.0% | ||
Our gross loss was RMB9.5 million or US$1.5 million for the second quarter ended June 30, 2014, representing a gross loss rate of 13.6%, as compared to a gross loss rate of 3.0% for the same period in 2013. Correspondingly, gross loss rate increased by 10.6 percentage points compared to the same period in 2013. Our average product sales prices decreased by 14.0% compared to the same period last year while the average cost of goods sold decreased by 5.1% compared to the same period last year. Consequently, the amount of decrease in sales revenue was greater than the decrease in the cost of goods sold during the second quarter ended June 30, 2014 compared with the same period in 2013, which resulted in an increase in gross loss.
Operating expenses for the second quarter ended June 30, 2014 were RMB10.4 million or US$1.7 million, which was RMB3.2 million, or 23.5% lower than the same period in 2013. This decrease was mainly due to decreased R&D expenditure on new products in the second quarter of 2014.
Net loss attributable to the Company during the second quarter ended June 30, 2014 was RMB23.0 million or US$3.7 million compared to net loss attributable to the Company of RMB18.2 million during the same period in 2013, representing an increase of RMB4.8 million for the same period in 2013.
Basic and diluted net loss per share was RMB1.76 or US$0.28 and RMB1.39 for the three months ended June 30, 2014 and 2013, respectively.
Total shareholders' equity was RMB424.0 million or US$68.4 million as of June 30, 2014, compared with RMB460.3 million as of December 31, 2013.
As of June 30, 2014, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.
Conference Call Information
The Company will host a teleconference on Friday, August 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: 13588942. The replay will be available until September 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 JUNE 30, 2014 AND DECEMBER 31, 2013 (amounts in thousands except share and per share value) (Unaudited)
| |||||
June 30, 2014 | December 31, 2013 | ||||
RMB | US$ | RMB | |||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 5,478 | 883 | 11,578 | ||
Restricted cash | 41,787 | 6,736 | 41,422 | ||
Accounts and bills receivable, net | 7,337 | 1,183 | 8,373 | ||
Inventories | 32,513 | 5,241 | 38,454 | ||
Advance to suppliers | 6,868 | 1,107 | 6,977 | ||
Prepayments and other receivables | 25,052 | 4,038 | 26,107 | ||
Deferred tax assets - current | 1,670 | 269 | 1,702 | ||
Total current assets | 120,705 | 19,457 | 134,613 | ||
Property, plant and equipment, net | 505,569 | 81,496 | 524,777 | ||
Construction in progress | 366 | 59 | 632 | ||
Lease prepayments, net | 18,667 | 3,009 | 18,999 | ||
Advance to suppliers - long term, net | 2,945 | 475 | 2,134 | ||
Long-term deposit | 16,760 | 2,702 | 16,760 | ||
Other Assets | 12,947 | 2,087 | 13,244 | ||
Deferred tax assets - non current | 20,817 | 3,356 | 20,888 | ||
Total assets | 698,776 | 112,641 | 732,047 | ||
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Short-term borrowings | - | - | 105,000 | ||
Long-term loan, current portion | 1,675 | 270 | - | ||
Due to related parties | 120,000 | 19,344 | - | ||
Accounts payables | 35,872 | 5,782 | 33,454 | ||
Notes payable | 78,200 | 12,606 | 81,990 | ||
Advance from customers | 7,114 | 1,147 | 14,665 | ||
Accrued expenses and other payables | 7,956 | 1,282 | 6,777 | ||
Obligations under capital leases-current | 8,587 | 1,384 | 8,314 | ||
Total current liabilities | 259,404 | 41,815 | 250,200 | ||
Obligations under capital leases | 4,200 | 677 | 8,563 | ||
Long-term loan | 8,325 | 1,342 | 10,000 | ||
Deferred tax liabilities | 3,613 | 582 | 3,736 | ||
Total liabilities | 275,542 | 44,416 | 272,499 | ||
Equity | |||||
Shareholders' equity | |||||
Registered capital(of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding) | 13,323 | 2,148 | 13,323 | ||
Additional paid-in capital | 311,907 | 50,278 | 311,907 | ||
Statutory reserve | 37,441 | 6,035 | 37,441 | ||
Retained earnings | 60,130 | 9,693 | 96,370 | ||
Cumulative translation adjustment | 1,211 | 196 | 1,266 | ||
Total shareholders' equity | 424,012 | 68,350 | 460,307 | ||
Non-controlling interest | (778) | (125) | (759) | ||
Total equity | 423,234 | 68,225 | 459,548 | ||
Total liabilities and equity | 698,776 | 112,641 | 732,047 | ||
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013 (amounts in thousands except share and per share value) (Unaudited)
| ||||||||||
The Three-Month Period Ended June 30, | The Six-Month Period Ended June 30, | |||||||||
2014 | 2013 | 2014 | 2013 | |||||||
RMB | US$ | RMB | RMB | US$ | RMB | |||||
Net sales | 69,984 | 11,281 | 77,401 | 140,689 | 22,679 | 153,978 | ||||
Cost of sales | 79,482 | 12,812 | 79,708 | 150,256 | 24,221 | 157,476 | ||||
Gross loss | (9,498) | (1,531) | (2,307) | (9,567) | (1,542) | (3,498) | ||||
Operating expenses | ||||||||||
Selling expenses | 3,430 | 553 | 3,625 | 6,789 | 1,,094 | 7,970 | ||||
Administrative expenses | 7,004 | 1,129 | 9,985 | 14,058 | 2,266 | 19,291 | ||||
Total operating expenses | 10,434 | 1,682 | 13,610 | 20,847 | 3,360 | 27,261 | ||||
Operating loss | (19,932) | (3,213) | (15,917) | (30,414) | (4,902) | (30,759) | ||||
Other income (expense) | ||||||||||
- Interest income | 260 | 42 | 281 | 640 | 103 | 342 | ||||
- Interest expense | (3,256) | (525) | (2,664) | (6,424) | (1,036) | (5,881) | ||||
- Others income (expense), net | 25 | 4 | (27) | (63) | (10) | (128) | ||||
Total other expense | (2,971) | (479) | (2,410) | (5,847) | (943) | (5,667) | ||||
Loss before provision for income taxes | (22,903) | (3,692) | (18,327) | (36,261) | (5,845) | (36,426) | ||||
Income tax benefit (expense) | (79) | (13) | 136 | 20 | 3 | 159 | ||||
Net loss | (22,982) | (3,705) | (18,191) | (36,241) | (5,842) | (36,267) | ||||
Net (loss) income attributable to noncontrolling interests | (1) | 0 | (1) | (1) | 0 | (1) | ||||
Net loss attributable to the Company | (22,981) | (3,705) | (18,190) | (36,240) | (5,842) | (36,266) | ||||
Other comprehensive income (loss) | ||||||||||
- Foreign currency translation adjustments attributable to noncontrolling interest | 1 | 0 | 10 | (19) | (3) | 12 | ||||
- Foreign currency translation adjustments attributable to the Company | (7) | (1) | 19 | (55) | (9) | 30 | ||||
Comprehensive income (loss) attributable to non-controlling interest | 0 | 0 | 9 | (20) | (3) | 11 | ||||
Comprehensive loss attribute to the Company | (22,988) | (3,706) | (18,171) | (36,295) | (5,851) | (36,236) | ||||
Loss per share, | (1.76) | (0.28) | (1.39) | (2.77) | (0.45) | (2.78) | ||||
Weighted average number ordinary shares, | 13,062,500 | 13,062,500 | 13,062,500 | 13,062,500 | 13,062,500 | 13,062,500 | ||||
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013 (amounts in thousands except share and per share value) (Unaudited)
| |||||
The Six-Month Period Ended June 30, | |||||
2014 | 2013 | ||||
RMB | US$ | RMB | |||
Cash flow from operating activities | |||||
Net loss | (36,241) | (5,842) | (36,267) | ||
Adjustments to reconcile net loss to net cash | |||||
(used in) provided by operating activities | |||||
- Gain on disposal of property, plant and equipment | - | - | - | ||
- Depreciation of property, plant and equipment | 24,031 | 3,874 | 24,353 | ||
- Amortization of intangible assets | 262 | 42 | 262 | ||
- Deferred income taxes | (20) | (3) | (159) | ||
- Bad debt expense (recovery) | (115) | (19) | 1,495 | ||
Changes in operating assets and liabilities | |||||
- Accounts and bills receivable | 1,150 | 185 | 6,797 | ||
- Inventories | 5,942 | 958 | (14,526) | ||
- Advance to suppliers | 109 | 18 | 8,701 | ||
- Prepaid expenses and other current assets | (814) | (131) | (1,916) | ||
- Accounts payable | 2,418 | 390 | (1,641) | ||
- Accrued expenses and other payables | 1,116 | 180 | (291) | ||
- Advance from customers | (7,551) | (1,217) | 4,402 | ||
- Tax payable | 2,236 | 360 | (2,408) | ||
Net cash used in operating activities | (7,477) | (1,205) | (11,198) | ||
Cash flow from investing activities | |||||
Purchases of property, plant and equipment | (4,823) | (777) | (244) | ||
Restricted cash related to trade finance | (357) | (58) | (26,298) | ||
Advanced to suppliers - non current | (811) | (131) | (2,288) | ||
Amount change in construction in progress | 265 | 43 | (3,559) | ||
Proceeds from sale of property, plant and equipment | - | - | - | ||
Net cash used in investing activities | (5,726) | (923) | (32,389) | ||
Cash flow from financing activities | |||||
Principal payments of short-term bank loans | (105,000) | (16,926) | (110,000) | ||
Proceeds from short-term bank loans | - | - | 107,032 | ||
Proceeds from related party | 120,000 | 19,344 | - | ||
Payment of capital lease obligation | (4,090) | (659) | (4,164) | ||
Change in notes payable | (3,790) | (611) | 49,886 | ||
Proceeds from sale-leaseback equipment | - | - | 5,000 | ||
Net cash provided by financing activities | 7,120 | 1,148 | 47,754 | ||
Effect of foreign exchange rate changes | (17) | (50) | (6) | ||
Net increase (decrease) in cash and cash equivalent | (6,100) | (1,030) | 4,161 | ||
Cash and cash equivalent | |||||
At beginning of period | 11,578 | 1,913 | 5,006 | ||
At end of period | 5,478 | 883 | 9,167 | ||
SUPPLEMENTARY DISCLOSURE: | |||||
Interest paid | 6,424 | 1,036 | 5,881 | ||
Income tax paid | - | - | - | ||
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: | |||||
Account payable for plant and equipment: | 7,883 | 1,271 | 6,220 | ||
Obligations for acquired equipment under capital lease: | 12,787 | 2,061 | 20,836 | ||
