Teleconference to be Held at 8:30 a.m. EDT
BEIJING, April 14 /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 announced the financial results for the fourth quarter and full year
ended December 31, 2007.
Financial Results Highlights
-- Revenues for 2007 rose 2.9% to US$59.1 million (RMB 449.4 million) from
2006;
-- Revenues of specialty films in 2007 rose 6.1% from 2006 to US$22.4
million (RMB 170.0 million), or 37.8% of total revenues;
-- Revenues from overseas in 2007 soared 23.9% from 2006 to US$15.0
million (RMB 114.2 million), or 25.4% of total revenues;
-- Gross margin was 22.2% in 2007, as opposed to 23.5% in 2006;
''We are pleased to report a solid year of decent top-line growth and further buildup of our research team,'' said Xiaoan He, Chairman and CEO of Fuwei Films. ''Our exports saw strong expansion, due to our enhanced efforts to market overseas. And we continued to grow sales of higher-margin specialty films, even though we have been facing a challenging operating environment since the second half of 2007, exemplified by higher raw material costs and the capital shortfall for our Third Production Line of thick films.''
Mr. He continued, ''Going forward, we will keep using our newly strengthened R&D platform and our Trial Production Line to commercialize products. Finally, we believe that our enhanced foreign marketing campaigns are positioning us to yield encouraging results in new markets.''
Fourth Quarter Financial Results
Revenues for the fourth quarter of 2007 -- --
Deferred income tax assets -- -- --
Total current assets 372,001 211,842 29,041
Property, plant and equipment, net 317,690 493,562 67,661
Lease prepayments 23,059 22,290 3,056
Deposits for purchase of property,
plant and equipment 13,900 -- --
Intangible asset, net 109 36 5
Goodwill 10,276 10,276 1,409
Deferred income tax assets 1,047 969 133
Total assets 738,082 738,975 101,304
Liabilities
Current liabilities
Short-term bank loans 239,678 188,027 25,776
Accounts payable 12,809 19,609 2,688
Accrued expenses and other payables 19,497 18,544 2,542
Amounts due to related parties -- --
Deferred income tax liabilities 191 265 36
Total liabilities 272,175 226,445 31,043
Shareholders' equity
Ordinary shares of US$0.129752 par
value; 20,000,000 shares authorized;
771 and 13,062,500 issued and
outstanding as of December 31, 2006
and 2007, respectively 13,323 13,323 1,826
Additional paid-in capital 311,907 311,907 42,759
Accumulated other comprehensive
income 1,785 1,148 157
Retained earnings 138,892 186,152 25,519
Total shareholders' equity 465,907 512,530 70,262
Total liabilities and shareholders'
equity 738,082 739,975 101,304
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the years ended December 31, 2005, 2006 and 2007
(Audited, amounts in thousands, except share and per share data)
2005 2006 2007
RMB RMB RMB US$
Revenues, net 346,205 436,884 449,373 59,083
Cost of goods sold (259,090) (334,341) (349,531) (45,956)
Gross profit 87,115 102,543 99,842 13,127
Operating expenses
- Distribution expenses (10,517) (16,483) (15,061) (1,980)
- Administrative expenses (10,599) (8,043) (20,515) (2,698)
Total operating expenses (21,116) (24,526) (35,576) (4,678)
Operating income 65,999 78,017 64,266 8,450
Other income/(expense)
- Interest income 863 43 589 77
- Interest expense (13,747) (12,884) (13,233) (1,739)
- Sales of scrap materials 3,596 3,639
- Others, net 358 (393) 319 42
Total other income/(expense) (8,930) (9,595) (12,325) (1,620)
Income before income tax
benefit/(expense) 57,069 68,422 51,941 6,829
Income tax benefit/(expense) 59 (757) (4,681) (615)
Net income 57,128 67,665 47,260 6,214
Other comprehensive income
- Foreign currency
translation adjustments 1,732 53 (637) --
Comprehensive income 58,860 67,718 46,623 6,214
Earnings per share
- Basic 74,096 61.46 3.62 0.48
- Diluted 74,096 61.37 3.62 0.48
Weighted average number of
ordinary shares
- Basic 771 1,101,031 13,062,500 13,062,500
- Diluted 771 1,102,488 13,062,500 13,062,500
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2005, 2006 and 2007
(Audited, amounts in thousands)
2005 2006 2007 2007
RMB RMB RMB US$
Cash flow from operating activities
Net income 57,128 67,665 47,260 6,214
Adjustments to reconcile net income to
net cash (used in)/provided by
operating activities
- Loss/(gain) on disposal of property,
plant and equipment (32) -- -- --
- Depreciation of property, plant and
equipment 23,337 23,425 23,217 3,053
- Amortization of intangible assets 73 72 73 10
- Lease prepayments charged to expense 392 724 741 97
- Deferred income taxes (59) 757 152 20
- Bad debt expense/(recovery) 1,007 (1,143) 1,772 233
- Foreign currency exchange loss 1 53 -- --
Changes in operating assets and
liabilities
- Accounts receivable (21,676) (28,258) 17,335 2,279
- Inventories (6,855) 1,104 (19,659) (2,585)
- Prepaid expenses and other current
assets 4,780 (8,220) 6,698 881
- Accounts payable (1,044) 2,196 6,824 897
- Accrued expenses and other payables (13,880) 117 (1,557) (205)
- Amounts due from related parties 415 -- -- --
Net cash provided by operating
activities 43,587 58,492 82,856 10,894
Cash flow from investing activities
Purchases of property, plant and
equipment (22,411) (37,526) (590) (78)
Restricted cash related to trade finance -- (3,311) (61,598) (8,099)
Payment of land use rights -- (2,649) -- --
Deposits paid for purchase of property,
plant and equipment (13,900) -- (184,600) (24,271)
Proceeds from sale of property, plant
and equipment 111 7 -- --
Collection of amounts due from related
parties 4,721 -- -- --
Net cash used in investing activities (31,479) (43,479)(246,787) (32,447)
Cash flow from financing activities
Net proceeds from issuance of share
capital -- 235,867 -- --
Principal payments of short-term bank
loans (252,600) (18,368) (51,650) (6,791)
Proceeds from short-term bank loans 300,056 10,000 -- --
Repayments of loans payable to related
parties (29,989) -- -- --
Payments of expenses relating to the
proposed offering (1,785) -- -- --
Dividends paid (26,265) -- -- --
Net cash (used in)/provided by financing
activities (10,583) 227,499 (51,650) (6,791)
Effect of foreign exchange rate changes (1) -- (3,448) 555
Net increase/ (decrease) in cash 1,524 242,512 (219,029) (27,789)
Cash
At beginning of the year 5,903 7,427 249,939 32,027
At end of the year 7,427 249,939 30,909 4,237
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the years ended December 31, 2005, 2006 and 2007
(Audited, amounts in thousands)
2005 2006 2007
RMB RMB RMB US$
Supplemental disclosure of
cash flow information
Cash paid during the year for
interest expense 14,899 15,739 12,921 1,699
were US$16.3 million (RMB 121.5 million), compared with RMB 121.5 million in the fourth quarter of 2006. Revenues of specialty films in the fourth quarter 2007 rose 8.4% from same period 2006 to US$5.7 million (RMB 42.5 million), or 35.0% of total revenues.The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2007 and December 31, 2006 (amounts in thousands):
Three months period ended
December 31,
December 31, 2007 % of 2006 % of
RMB US$ Total RMB Total
Printing film 23,493 3,162 19.3 28,588 23.5
Stamping film 19,078 2,568 15.7 28,419 23.4
Metallization film 8,724 1,174 7.2 7,117 5.9
Base film for other
applications 27,751 3,735 22.8 14,509 11.9
Specialty film 42,480 5,717 35.0 42,848 35.3
Total 122,005 16,356 100 121,482 100
Revenues from overseas in the fourth quarter of 2007 increased 1.5%
from same period 2006 to US$3.2 million (RMB 23.5 million), or 19.4% of
total revenues.
The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2007 and December 31, 2006 (amounts in thousands):
Three months period ended
December
December 31, 2007 % of 31, 2006 % of
RMB US$ Total RMB Total
Sales in China 98,006 13,191 80.6 98,305 80.9
Sales in other
countries 23,521 3,166 19.4 23,177 19.1
Total 121,527 16,357 100 121,482 100
Gross profit for the fourth quarter of 2007 was US$2.6 million (RMB 19.3 million), compared with RMB 27.8 million in same period 2006. The Company generated a gross margin of 16.0% in fourth quarter 2007, versus 22.9% in same period 2006. The decrease in gross margin was primarily due to increased raw material consumption on the Rental Production Line. In addition, since the second half of 2007, the decrease of export tax rebates rate also has contributed to the lower gross profit.
Operating expenses in the fourth quarter of 2007 was US$1.7 million (RMB 12.4 million), compared with RMB 5.5 million. The increase was mainly due to: 1) higher costs of professional services related to being as a public company; and 2) administrative expenses such as wage increases. Selling expenses in fourth quarter 2007 decreased 8.1% from fourth quarter 2006 to US$471,000 (RMB 3.4 million). Administrative expenses increased to US$1.3 million (RMB 10.0 million) from RMB 2.6 million.
Net income for the fourth quarter of 2007 decreased to US$0.2 million (RMB 1.0 million), or diluted EPS of US$0.01 (RMB 0.08), from RMB 21.5 million, or diluted EPS of RMB 19.5 in the same period of 2006.
Full Year 2007 Financial Results
Revenues for the year 2007 rose 2.9% from 2006 to US$59.1 million (RMB 449.4 million). The increase in net sales was primarily due to increased sales from the Rental Production Line.
Revenues of specialty films in 2007 rose 6.1% from 2006 to US$22.4
million (RMB 170.0 million), or 37.8% of total revenues. The increase was
largely attributable to the heightened popularity of high-end specialty
films like heat-sealable films, high-gloss films, as more customers opted
for them to enhance their product image. The growth in specialty films also
benefited from exports to Korea, the United States and Europe.
The following is a breakdown of commodity and specialty film sales for the full-year periods ended December 31, 2007 and December 31, 2006 (amounts in thousands):
Fiscal Year Ended
December
December 31, 2007 % of 31, 2006 % of
RMB US$ Total RMB Total
Printing film 83,453 10,972 18.6 95,315 21.8
Stamping film 94,366 12,407 21.0 99,856 22.9
Metallization film 30,668 4,032 6.8 34,772 8.0
Base film for other
applications 70,925 9,325 15.8 46,784 10.7
Specialty film 169,961 22,346 37.8 160,157 36.7
Total 449,373 59,082 100 436,884 100
Revenues from overseas in 2007 soared 23.9% from 2006 to US$15.0
million (RMB 114.2 million), or 25.4% of total revenues.
The following is a breakdown of domestic versus overseas sales for the full-year periods ended December 31, 2007 and December 31, 2006 (amounts in thousands):
Fiscal year period ended
December
December 31, 2007 % of 31, 2006 % of
RMB US$ Total RMB Total
Sales in China 335,213 44,073 74.6 345,122 79.0
Sales in other
countries 114,160 15,010 25.4 91,762 21.0
Total 449,373 59,083 100 436,884 100
Gross profit for 2007 was US$13.1 million (RMB 99.8 million), compared with RMB 102.5 million. Gross margin was 22.2%, as opposed to 23.5% in 2006. The decrease in gross margin was primarily due to increased consumption by the Rental Production Line. In addition, since the second half of 2007, the decrease of export tax rebates rate also has contributed to the lower gross profit.
Operating expenses for 2007 were $4.7 million (RMB 35.6 million), compared with RMB 24.5 million in 2006. The increase was mainly due to higher costs of professional services related to being a public company, as well as due to higher administrative expenses, such as wage increases. Selling expenses decreased 8.5% to $2.0 million ($15.1 million) from 2006, while administrative expenses increased to $2.7 million (RMB 20.5 million), from RMB 8.0 million in 2006.
Net income for the year 2007 decreased to US$6.2 million (RMB 47.3million), or diluted EPS of US$0.48 (RMB 3.62), versus RMB 67.7 million, or diluted EPS of RMB 61.4 in 2006.
Total cash and cash equivalents as of December 31, 2007 were US$4.2 million (RMB 30.9 million) as compared with RMB 249.9 million as of December 31, 2006.
Total shareholders' equity increased to US$70.3 million (RMB 512.5 million) as of December 31, 2007 from a total shareholders' equity of RMB 465.9 million as of December 31, 2006.
As of December 31, 2007, the Company has 13,062,500 basic and diluted total common shares outstanding.
The Trial Production Line
Fuwei began the construction of a Trial Production Line which is capable of producing BOPET films with thickness of 12-50 m and has an annual designed capacity of 1,500 metric tones. The Trial Production Line has finished the equipment installation stage at the end of 2007 and currently is being used for research and development purpose. It is expected to strengthen Fuwei's competitive advantage by allowing more focused research and development of multi-layer BOPET films.
Overseas Marketing Expansion
Fuwei has also reinforced its marketing and sales efforts overseas. On October 25, 2007, the Company opened a marketing office in Osaka, Japan, to focus on market expansion and customer service for BOPET films in Japan. Research indicates Japanese customers are in favor of top-quality BOPET films and world-class after-sales support. By establishing an office in Japan, the Company aims to familiarize itself with the local market and increase the promotion of Fuwei's brand. Fuwei is also targeting the Korean market for beneficial results.
Research & Development Initiatives
Fuwei has been strengthening its R&D capabilities. Its R&D team now has 13 senior researchers and technicians, including one Ph.D and seven masters degree-holders. In addition, the Company recruited five foreign consultants with extensive expertise in the BOPET industry. On the intellectual property front, Fuwei received four patents from the Chinese authorities, with three more pending.
Appointment of New CFO
On April 11, 2008, the Company appointed Mr. Xiuyong Zhang as the new Chief Financial Officer. Mr. Zhang has been a director of the Company since November 2007. He has also been a director of Fuwei's operating subsidiary, Fuwei Films (Shandong) Co., Ltd., since July 2004 and Vice President for Finance there since January 2005. He has more than 10 years of experience in accounting, finance and investments, and holds a Certified Public Accountant title issued by the Ministry of Finance in China. He has received the Professional Certification in Laws from China University of Political Science and Law and China Central Radio and TV University.
Strategic Outlook
In 2008, the Company aims to use the newly strengthened R&D team and make full use of the Trial Production Line to develop innovative materials and techniques for high-end specialty films, such as the in-line coating film for food packaging, the DFR base film for electronic industry, the white film for outdoor billboards, and the soft embossable, holographic film for anti-fraud purposes.
Some of the new products as described above, such as the white film, are attractively viewed by overseas customers. The Company is currently positioning itself for an market adjustment phase overseas. By adjusting its export product composition, Fuwei is seeking to achieve both stronger sales and higher margins in foreign markets, especially Japan and Korea.
Conference Call Information
The Company will host a teleconference today, Monday, April 14, 2008, at 8:30 a.m. EDT / 8:30 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 call start time. The call is being simultaneously Webcast and can be accessed on the Fuwei Films Website at http://www.fuweiholdings.com . Please visit the Web site at least 15 minutes prior to the scheduled call time to register for the Web cast and download any necessary audio software.
A replay of the call can also be accessed via telephone from 12:00 p.m. EDT on Monday, April 14, 2008, through 11:59 p.m. EST on Tuesday April 29, 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: 274493. A Web cast replay of the call will also be made and can be accessed on the Fuwei Films site at http://www.fuweiholdings.com .
About Fuwei Films
Fuwei Films conducts its business through its wholly owned subsidiary Shandong Fuwei Films Co., Ltd. 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 more fiscally 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.
For more information, please contact:
In China:
Christina He
Investor Relations
Tel: +86-10-8518-5620
Email: fuweiIR@fuweifilms.com
In the U.S.:
Leslie Wolf-Creutzfeldt
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9472
Email: lwolf-creutzfeldt@hfgcg.com
Financial Tables to Follow
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2006 and 2007
(Audited, amounts in thousands, except share and per share data)
2,006 2,007
RMB RMB US$
Assets
Current assets
Cash 249,939 30,909 4,237
Restricted cash 3,311 64,909 8,898
Accounts receivable, net 75,530 58,195 7,978
Inventories 23,783 41,670 5,712
Prepayments and other receivables 19,438 16,160 2,215
Deferred expenses --
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| SOURCE Fuwei Films (Holdings) Co. Limited Copyright©2008 PR Newswire. All rights reserved |
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