- Teleconference to be Held Friday, November 14, 2008, at 8:30 a.m.
EST - BEIJING, Nov. 13 /Xinhua-PRNewswire-FirstCall/ -- Fuwei Films
(Holdings) Co. Limited (NASDAQ:FFHL) ("Fuwei" or "the Company"), a
manufacturer and distributor of high-quality BOPET plastic films in
China, today released the financial results for the third quarter
and first nine months of 2008. Financial Highlights -- In the third
quarter of 2008, revenue rose 11.2% to RMB 119.8 million (US$17.5
million) from the same period of 2007; -- In the first nine months
of 2008, revenue rose 6.3% to RMB 348.6 million (US$49.8 million)
from the same period of 2007. "We hereby release our third quarter
of 2008 financial results," said Xiaoan He, Chairman and CEO of
Fuwei Films. "We entered the first nine months of 2008 with a
number of challenges including strong competition in the
marketplace, an increase in the cost of raw materials, energy and
labor, especially the rapid changes in the macro-economic
environments both at home and abroad, anti-dumping investigations
in the United States and Korea, and the inadequate domestic and
overseas market demand resulting from the world- wide financial
crisis which originated in the United States during the third
quarter. Furthermore, the implementation of Chinese macro control
policy by the Chinese government this year and the Chinese
government's support for environmental protection and the measures
taken by the government against excessive luxurious packaging have
caused the demand for the high-end and luxurious BOPET films to
decline. Despite the fact that we have received the comparatively
lower anti-dumping duty rate from Korea and the United States,
which was expected to have positive effects on recovering overseas
sales, current overseas sales still remained the same, resulting
from the decreased demand in overseas market caused by the
financial crisis. Consequently, the results of the first nine
months in 2008 were not as strong as the same period last year."
Mr. He continued, "However, we believe that Fuwei will be able to
continue to utilize its current advantages when facing the negative
influences of the macro economic environment and of challenges
arising from an uncertain economic future." Third Quarter of 2008
Financial Results For the third quarter of 2008, revenue rose 11.2%
to RMB 119.8 million (US$17.5 million) from the third quarter of
2007. Revenue of specialty films was RMB 22.1 million (US$3.2
million), or 18.5% of total revenue. The following is a breakdown
of commodity and specialty film sales for the three-month periods
ended September 30, 2008 and September 30, 2007 (amounts in
thousands): Three-month period ended September 30,2008 September
30,2007 % of % of RMB US$ Total RMB Total Printing film 16,661
2,413 13.9% 18,327 17.0% Stamping film 41,945 6,121 35.0% 24,224
22.5% Metallization film 20,171 2,943 16.8% 8,323 7.7% Base film
for other applications 18,938 2,764 15.8% 15,743 14.7% Specialty
film 22,134 3,230 18.5% 41,037 38.1% Total 119,849 17,489 100.0%
107,652 100.0% Revenue from overseas in the third quarter of 2008
was RMB 16.2 million (US$2.4 million), or 13.5% of total revenues.
The following is a breakdown of domestic versus overseas sales for
the three-month periods ended September 30, 2008 and September 30,
2007 (amounts in thousands): Three-month period ended September
30,2008 September 30,2007 % of % of RMB US$ Total RMB Total Sales
in China 103,674 15,129 86.5% 88,741 82.4% Sales in other countries
16,175 2,360 13.5% 18,912 17.6% Total 119,849 17,489 100.0% 107,652
100.0% Gross profit was RMB 14.6 million (US$2.1 million), compared
with RMB 23.6 million (US$3.4 million) in the same period of 2007.
The Company generated a gross margin of 12.1%, versus 21.9% in the
same period of 2007. The decrease in gross margin was mainly due to
the decline of the average selling prices, the decreased sales of
specialty films, as well as the increased costs of raw materials,
power and labor. Operating expenses were RMB 8.4 million (US$1.2
million). Selling expenses increased 34.4% to RMB 3.9 million
(US$0.6 million) from the same period of 2007. Administrative
expenses decreased 11.8 % to RMB 4.5 million (US$0.7 million) from
the same period of 2007. Net income was RMB 7.1 million (US$1.0
million) compared with RMB 12.9 million (US$1.7 million) in the
same period of 2007. Earnings per diluted share were RMB 0.54
(US$0.08) compared with RMB 0.99 (US$0.14) in the same period of
last year. Total diluted shares outstanding remained the same as
the third quarter of 2007, at 13,062,500 as of September 30, 2008.
Nine-month 2008 Financial Results For the first nine months of
2008, revenue rose 6.3% to RMB 348.6 million (US$49.8 million) from
the same period of 2007. Revenue of specialty films in the first
nine months of 2008 was RMB 97.0 million (US$13.9 million), or
27.8% of total revenue. The following is a breakdown of commodity
and specialty film sales for the nine-month periods ended September
30, 2008 and September 30, 2007 (amounts in thousands): Three-month
period ended September 30,2008 September 30,2007 % of % of RMB US$
Total RMB Total Printing film 48,047 6,865 13.8% 59,961 18.3%
Stamping film 87,916 12,561 25.2% 75,288 23.0% Metallization film
35,915 5,132 10.3% 21,944 6.7% Base film for other applications
79,716 11,390 22.9% 43,173 13.1% Specialty film 97,035 13,864 27.8%
127,481 38.9% Total 348,629 49,812 100.0% 327,847 100.0% Revenue
from overseas in the first nine months of 2008 was RMB 48.7 million
(US$7.0 million), or 14.0% of total revenue. The following is a
breakdown of domestic versus overseas sales for the nine-month
periods ended September 30, 2008 and September 30, 2007 (amounts in
thousands): Three-month period ended September 30,2008 September
30,2007 % of % of RMB US$ Total RMB Total Sales in China 299,975
42,860 86.0% 236,971 72.3% Sales in other countries 48,654 6,952
14.0% 90,876 27.7% Total 348,629 49,812 100.0% 327,847 100.0% Gross
profit was RMB 58.1 million (US$8.3 million), compared with RMB
80.5 million (US$11.7 million) in the same period of 2007. The
Company generated a gross margin of 16.7%, versus 24.6% in the same
period of 2007. Operating expenses were RMB 28.5 million (US$4.1
million), compared with RMB 23.2 million (US$3.4 million) in the
same period of 2007. Selling expenses were a little bit lower
compared with the corresponding period of 2007. Administrative
expenses increased to RMB 16.9 million (US$2.4 million) from RMB
11.6 million (US$1.7 million) in the same period of 2007. Net
income was RMB 24.7 million (US$3.5 million), or diluted EPS of RMB
1.89 (US$0.27), compared with RMB 46.3 million (US$6.0 million), or
diluted EPS of RMB 3.54 (US$0.51) in the same period of 2007. Total
shareholders' equity increased to RMB 537.1 million (US$78.4
million) as of September 30, 2008, from RMB 530.3 million (US$77.3
million) as of June 30, 2008. Recent Developments On September 9,
2008, the Company announced that its BOPET Dry Resist Films Project
was a Shandong government-supported key technology project. Such
government-supported initiatives have in the past received priority
in borrowing from banks. In addition, the Company also announced
its patent application of Single-Sided Matte BOPET films had been
accepted by the State Intellectual Property Office ("SIPO").
Single-Sided Matte BOPET film is a high-quality and more
aesthetically pleasing product. Compared with traditional BOPET
films, it is also more cost efficient. On September 18, 2008, the
Company announced that Fuwei Films (Shandong) Co., Ltd. the
Company's wholly-owned operating subsidiary ("Fuwei Shandong"), has
filed six new patent applications, all of which are awaiting
reviews by SIPO. The six patents comprise four new inventions and
two innovations. These patents can be used in tobacco packaging,
fresh food preservation, laminated panel of electric appliances and
LCD screens. The Company expects to employ the new patents to
further penetrate the high-end BOPET film market and attract
affluent high-end users. The review process is expected to be one
to three years. On September 2, 2008, the Company announced that
the Korean Trade Commission made the final determination of the
anti-dumping investigation of BOPET films originated in China and
India on August 27, 2008 and decided to recommend to the Ministry
of Strategy and Finance to levy the anti-dumping duty ("ADD") on
such imports for five years. The final determination of the ADD
rate for Fuwei is 5.67%, versus 6.13% in the preliminary
determination. The ADD rate for other Chinese companies is 23.6%
except two other Chinese companies which enjoy the ADD rate of
8.93% and 15.95%, respectively. The ADD rate for one Indian company
is 10.4% and for other Indian companies is 25.32%. The ADD rates
became effective on October 27, 2008. On October 8, 2008, the
Company announced that it has received the final results of the
BOPET film-related anti-dumping investigation conducted by the
United States. Fuwei was one of the five Chinese BOPET film
manufacturers to receive the lowest ADD rate of 3.49%. The average
ADD rate for other Chinese companies has been assessed at 76.72% in
this investigation. On October 31, 2008, the Company announced that
the Company became aware that the initial trial of the Company's
three major shareholders, Mr. Jun Yin, Mr. Tongju Zhou and Mr. Duo
Wang, had begun on October 23 and continued on October 24 and
October 27, 2008. The trial was held at Jinan Intermediate People's
Court in the city of Jinan, Shandong Province. As of October 27,
2008, there has been no verdict announced by Jinan Intermediate
People's Court. Conference Call Information The Company will host a
teleconference on Friday, November 14, 2008, at 8:30 a.m. EST /
9:30 p.m. Beijing time to discuss the quarterly 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 is being
simultaneously Webcast and can be accessed on 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
Webcast and download any necessary audio software. A replay of the
call can also be accessed via telephone until 11:59 p.m. EST on
Friday, November 21, 2008, 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: 301666. A
Web cast replay of the call will also be made and can be accessed
on the Fuwei's site at http://www.fuweiholdings.com/ . About Fuwei
Films Fuwei conducts its business through its wholly owned
subsidiary 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://www.fuweiholdings.com/ . 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.
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 disclosed in the Company's reports filed with the United
States 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 which
include, among other things, the global financial crisis of 2008,
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. FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2008 AND DECEMBER
31, 2007 (amounts in thousands except share and per share value) As
of Sep. 30, 2008 As of Dec. (Unaudited) 31, 2007 RMB US$ RMB ASSETS
Current assets Cash and cash equivalents 3,383 493 30,909
Restricted cash 14,097 2,056 64,909 Accounts receivable, net 63,995
9,335 58,195 Inventory 56,557 8,250 41,670 Advance to suppliers
30,425 4,438 13,538 Prepayments and other receivables 3,592 526
2,622 Total current assets 172,049 25,098 211,842 Plant and
equipment, net 214,710 31,321 228,309 Construction in progress
301,155 43,931 265,253 Lease prepayments, net 22,638 3,302 22,290
Intangible assets -- -- 36 Goodwill 10,276 1,499 10,276 Deposit
21,000 3,064 -- Deferred tax assets 1,019 150 969 Total assets
742,847 108,365 738,975 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Short-term borrowings 166,491 24,287 188,027
Accounts payables 20,878 3,046 19,609 Advance from customers 15,012
2,190 10,957 Accrued expenses and other payables 3,104 453 7,587
Deferred tax liabilities 259 38 265 Total liability 205,744 30,014
226,445 Shareholders' equity Registered capital (of US$0.129752 par
value; 20,000,000 shares authorized; 13,062,500 issued and
outstanding) 13,323 1,944 13,323 Additional paid-in capital 311,907
45,500 311,907 Statutory reserve 30,077 4,387 26,924 Retained
earnings 180,780 26,372 159,228 Cumulative translation adjustment
1,016 148 1,148 Total shareholders' equity 537,103 78,351 512,530
Total liabilities and shareholders' equity 742,847 108,365 738,975
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND
2007 (amounts in thousands except share and per share value)
(UNAUDITED) Three Month Period ended Sep. 30 2008 2007 RMB US$ RMB
Revenue 119,849 17,489 107,652 Cost of sales (105,297) (15,365)
(84,067) Gross profit 14,552 2,124 23,585 Operating expenses
Selling expenses (3,857) (563) (2,869) Administrative expenses
(4,510) (658) (5,116) Total operating expenses (8,367) (1,221)
(7,985) Operating income 6,185 903 15,600 Other income/(expense) -
Interest income 551 80 236 - Interest expense (392) (57) (1,745) -
Other, net 1,381 202 263 Total other income/(expense) 1,540 225
(1,246) Income before income tax expense 7,725 1,128 14,354 Income
tax benefit/(expense) (617) (90) (1,443) Net income 7,108 1,038
12,911 Other comprehensive income -Foreign currency translation
adjustments (300) (44) (8) Comprehensive income 6,809 994 12,903
Earnings per share, basic and diluted 0.54 0.08 0.99 Weighted
average number ordinary shares, basic and diluted 13,062,500
13,062,500 13,062,500 Nine Month Period ended Sep. 30 2008 2007 RMB
US$ RMB Revenue 348,629 49,812 327,847 Cost of sales (290,503)
(41,507) (247,323) Gross profit 58,126 8,305 80,524 Operating
expenses Selling expenses (11,595) (1,657) (11,623) Administrative
expenses (16,939) (2,420) (11,571) Total operating expenses
(28,534) (4,077) (23,194) Operating income 29,592 4,228 57,330
Other income/(expense) - Interest income 619 88 513 - Interest
expense (9,037) (1,291) (6,581) - Other, net 6,032 862 (299) Total
other income/(expense) (2,386) (341) (6,367) Income before income
tax expense 27,206 3,887 50,963 Income tax benefit/(expense)
(2,505) (358) (4,702) Net income 24,701 3,529 46,261 Other
comprehensive income -Foreign currency translation adjustments
(133) (19) (579) Comprehensive income 24,568 3,510 45,682 Earnings
per share, basic and diluted 1.89 0.27 3.54 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 NINE MONTH PERIODS
ENDED SEPTEMBER 30, 2008 AND 2007 (amounts in thousands except
share and per share value) (UNAUDITED) Period Ended Sep.30, Period
Ended 2008 Sep.30, 2007 RMB US$ RMB CASH FLOWS FROM OPERATING
ACTIVITIES Net income 24,701 3,529 46,261 Adjustments to reconcile
net income to net cash provided by operating activities -
Depreciation of property, plant and equipment 18,510 2,645 18,295 -
Amortization of intangible assets 377 54 561 - Deferred income
taxes -- -- 974 - Bad debt expense 662 95 -- Changes in operating
assets and liabilities, net of - Accounts receivable (6,213) (888)
24,153 - Inventories (14,887) (2,127) (27,325) - Advance to
suppliers (16,887) (2,413) -- - Prepaid expenses and other current
assets (1,970) (281) (29,292) - Accounts payable 1,274 182 7,972 -
Accrued expenses and other payables (1,479) (211) 5,531 - Advance
from customers 4,056 579 -- - Tax payable (3,007) (430) -- Net cash
provided by operating activities 5,137 734 47,130 CASH FLOWS FROM
INVESTING ACTIVITIES Purchases of property, plant and equipment
(4,912) (702) (130,700) Restricted cash related to trade finance
50,811 7,260 (41,368) Addition to construction in progress (35,901)
(5,130) -- Deposit for purchase (21,000) (3,000) -- Net cash used
in investing activities (11,002) (1,572) (172,068) CASH FLOW FROM
FINANCING ACTIVITIES Net proceeds from issuance of share capital
Principal payments of short-term bank loans (275,249) (39,327)
(239,678) Proceeds from short-term bank loans 253,714 36,250
183,169 Net cash used in financing activities (21,535) (3,077)
(56,509) Effect of foreign exchange rate changes (126) 171 (902)
Net decrease in cash and cash equivalent (27,526) (3,744) (182,349)
Cash and cash equivalent At beginning of period/year 30,909 4,237
249,939 At end of period/year 3,383 493 67,590 Supplemental
disclosure of cash flow information -Interest paid 9,578 1,369
10,068 -Income taxes paid 3,655 522 4,702 Non-cash transactions in
investing and financing activities: - Construction in progress
transferred to fixed assets 478 68 -- For more information, please
contact: In China: Christina He Investor Relations Manager Phone:
+86-10-8518-5620 Email: In the U.S.: Leslie Wolf-Creutzfeldt
Investor Relations Grayling Global Tel: +1-646-284-9472 Email:
DATASOURCE: Fuwei Films (Holdings) Co. Limited CONTACT: Christina
He, Investor Relations Manager, Fuwei Films (Holdings) Co. Limited,
+86-10-8518-5620, or Leslie Wolf- Creutzfeldt, Investor Relations,
Grayling Global, +1-646-284-9472, for Fuwei Films (Holdings) Co.
Limited Web site: http://www.fuweiholdings.com/
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