BEIJING, China, May 12 /Xinhua-PRNewsire-FirstCall/ -- Fuwei Films (Holdings) Co., Ltd. (Nasdaq: FFHL) announces its financial results for the first quarter ended March 31, 2007.
Net sales for the first quarter 2007 rose to RMB 99.3million (US$12.9
million), 2.3% higher than the first quarter 2006.
First quarter 2007 sales of specialty films were RMB 38.5 million (US$5.0
million), 16.3% higher than the first quarter last year. Sales of specialty
films reflected 38.8% of Fuwei's total net revenues as compared to 34.1% in
the same period of 2006. The increase was largely attributable to the stronger
sales volume of the specialty films as a result of increased trial and
acceptance by our customers as well as growth in the overall market.
The following is a breakdown of commodity and specialty film sales
(amounts in thousands):
March 31,2007 % of net March 31, 2006 % of net
RMB US$ sales RMB sales
Printing film 19,585 2,536 19.7% 20,686 21.3%
Stamping film 23,128 2,995 23.3% 21,719 22.4%
Metallization
film 5,935 768 6.0% 10,226 10.5%
Base film for
other
applications 12,128 1,570 12.2% 11,327 11.7%
Special film 38,489 4,984 38.8% 33,096 34.1%
99,265 12,853 100.0% 97,054 100.0%
========= ======== ========= ========= =========
Overseas sales in the first quarter 2007 were RMB 33.02 million
(US$4.27million), which accounted for 33.3% of our total net revenues as
compared to RMB 19.1 million (US$2.47 million) and 19.7% in the same period of
2006, 72.8% higher than the first quarter last year. The increase was mainly
due to management developing and implementing its strategy of diversifying
Fuwei's customer portfolio and targeting more overseas clients. The Company
has added a number of new customers from Korea and Europe in the first quarter
2007, which significantly contributes to the increase of overseas sales.
The following is a breakdown of PRC domestic and overseas sales (amounts
in thousands)
March 31,2007 % of net March 31,2006 % of net
RMB US$ sales RMB sales
Sales in China 66,247 8,578 66.7% 77,950 80.3%
Sales in other
countries 33,018 4,275 33.3% 19,104 19.7%
99,265 12,853 100.0% 97,054 100.0%
Cost of goods sold in the first quarter of 2007 totaled RMB 75.7 million
(US$ 9.8 million) versus RMB 73.7 million(US$ 9.5 million) in the prior year,
2.7% higher than the first quarter 2006. The costs were higher in the first
three months of 2007 because of higher raw materials costs.
Gross profit in the first quarter 2007 was RMB 23.6 million (US$3.1
million), representing a gross margin of 23.7%, a decrease of 0.4% from the
first quarter 2006 gross margin of 24.1%, mainly due to the increase in the
price of raw materials in the first quarter 2007, including the increase in
global oil prices. We increased the price of our products during this period
to partially offset the increase in the price of raw materials.
Sales, general and administrative expenses in the first quarter 2007 were
RMB 6.2 million (US$0.8 million), which was RMB1.9 million (US$0.2 million) or
44.6% higher than in the prior period. This was mainly due to the increased
costs related to being a U.S. listed, public reporting company in the first
quarter of 2007 when we were not during the same period in the prior year.
In the first quarter 2007, the company recorded an income tax expense of
RMB1.5 million (US$0.2 million) compared to RMB 0.3 million (US$36,000) in the
first quarter of 2006, representing a 400% increase. According to "Income Tax
Law of the PRC for Enterprises with Foreign Investment and Foreign
Enterprises", Shandong Fuwei is entitled to tax concessions whereby the profit
for the first two financial years beginning with the first profit-making year
(2005) is exempt from income tax in the PRC and the profit for each of the
subsequent three financial years (2007-2009) is taxed at 50% of the prevailing
tax rates set by the relevant tax authorities. Therefore, starting from 2007,
the Company will be paying 7.5% income tax as compared to the zero tax the
Company has paid over the past two years.
Net income in the first quarter 2007 was RMB13.3 million (US$1.7 million)
compared to RMB15.9 million (US$2.1million) in the first quarter of 2006,
showing a decrease of 16.4% from the first quarter 2006. The decrease in net
income was primarily due to the increase in costs related to being a U.S.
listed, public reporting company as well as the effect of income tax on
earnings.
Xiaoan He, CEO and Chairman of Fuwei Films stated "Net revenues in the
first quarter increased slightly compared to the first quarter volumes of
2006, whereas net sales of special films and overseas sales increased
dramatically this quarter. While our BOPET films sales performance was
consistent with our projections for the quarter, our gross profit and net
income were negatively impacted by higher cost of goods sold and expenses as a
result of the increase in the price of raw materials and costs associated with
being a U.S. listed, public reporting company respectively. Looking at the
balance of the year, I am confident that our continued focus on our marketing
strategy and work towards ongoing business improvement will continue to
deliver sales and in the coming months of 2007."
Fuwei's business development strategies include:
-- Investment in the third production line for higher margin BOPET
products. We expect the production line to begin commercial production
in the first quarter 2008 with an estimated annual designed production
capacity of 23,000 tons.
-- Rental of new production line announced in early April 2007.
-- Continued expansion into overseas markets and promotion of our products
in the PRC.
-- Development of advanced higher margin products through investment in
research and development.
About Fuwei Films:
Fuwei Films conducts its business through its wholly owned subsidiary
Shandong Fuwei Films Co., Ltd. ("Shandong Fuwei"). 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.
For more information about the Company, please visit the Company's website
at http://en.fuweifilms.com or www.fuweifilms.com or review the Company's
annual report and other documents for free at www.sec.gov.
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. Any such forward-looking statements
involve risk and uncertainties that could cause actual results to differ
materially from any future results described by the forward-looking
statements. Risk factors that could contribute to such differences include
those matters more fully disclosed in the Company's reports filed with the
Securities and Exchange Commission. 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.
The forward-looking statements included in this press release are subject
to risks, uncertainties and assumptions about our businesses and business
environments. These statements reflect our current views with respect to
future events and are not a guarantee of future performance. Actual results of
our operations may differ materially from information contained in the
forward-looking statements as a result of risk factors some of which are
include, among other things, 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.
Contact:
Investor Relations
Robert Schechter
Corporate Insights/Equity Communications
(646) 234 3624
rschechter@corp-insights.com
Investor Relations
Yan Young
Fuwei Films (Holdings) Co., Ltd.
(86) 10 85185620
fuweiIR@fuweifilms.com
Fuwei Films (Holdings) Co., Ltd.
Summary of Statement of Income Comparison (Unaudited)
For the three months ended March 31, 2007 and 2006
(amounts in thousands except share and per share amounts)
Periods Ended Periods Ended Periods Ended
March 31,2007 March 31, 2007 March 31, 2006
RMB US$ RMB
Net sales 99,265 12,853 97,054
Cost of sales (75,709) (9,803) (73,700)
Gross profit 23,556 3,050 23,354
Operating income 17,381 2,250 19,083
Income before income tax
benefit/(expense) 14,752 1,910 16,224
income tax benefit/(expense) (1,489) (193) (277)
Net income 13,263 1,717 15,947
Earnings per share (basic
and diluted)
- Basic 1.02 0.13 20,684
- Diluted 1.02 0.13 20,684
Weighted average number
ordinary shares
- Basic 13,062,500 13,062,500 771
- Diluted 13,062,500 13,062,500 771
Additional details regarding the statement of income, balance sheet and
cash flow can be found in the Company's Quarterly report on Form 10-Q filed
with the U.S. Securities and Exchange Commission.
