Fuwei Films Announces Second Quarter Fiscal 2013 Unaudited Financial Results

BEIJING, Aug. 22, 2013 /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, 2013.

Second Quarter 2013 Highlights

• Net sales for the second quarter were RMB77.4 million (US$12.6 million), compared with RMB92.4 million in the same period of 2012.
• Net loss attributable to the Company for the second quarter was RMB18.2 million (US$3.0 million), compared with net loss attributable to the Company of RMB11.9 million in the same period of 2012.
• Net cash used in operating activities during the first six months was RMB11.2 million (US$1.8 million), compared with net cash provided by operating activities RMB49.0 million in the same period of 2012.

Mr. Xiaoan He, Chairman and CEO of Fuwei Films, said, "We are still facing strong competition arising from increased supply over demand in the market which is impacting the Company's quarterly results. However, I am pleased to report that the progress with the third production line is on track. This production line has produced some commodity thick films ranging in thickness from 38μm to 250μm, and the Company is producing sample diffusion films (a type of TFT-LCD optical film) at 188μm at the request of our clients. We will continue to conduct commissioning and testing while developing new products during the trial operation. We believe the addition of the third line is a sound strategy that will help us deliver long-term value for our shareholders.

Second Quarter 2013 Results

Revenues for the second quarter ended June 30, 2013 were RMB77.4 million (US$12.6 million), representing a decrease of 16.2% from RMB92.4 million in the second quarter of 2012. The decrease in revenues was due to the reduction of average sales price by 5.9% driven by stronger competition in China and a simultaneous decrease in total sales volumes by 11.0%.

Overseas sales in the second quarter of 2013 were RMB9.5 million or US$1.5 million, or 12.3% of total revenues, compared with RMB20.1 million or 21.8% of total revenues in the second quarter of 2012. The decrease in overseas sales was due to 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 second quarter of 2012.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended June 30, 2013 and 2012 (amounts in thousands):

Gross loss for the second quarter of 2013 was RMB2.3 million (US$0.4 million) , representing a decrease of 221.1% from a gross profit of RMB1.9 million in the second quarter of 2012. Gross loss margin was 3.0%, as compared to a gross profit margin of 2.0% for the same period in 2012. The decrease of gross margin was primarily due to a 5.9% decrease in average product sales price driven by stronger competition in China which outpaced the decrease in the average cost of goods sold of 1.1% compared to the second quarter of 2012 which contributed to an increase in gross loss for the second quarter of 2013. 

Operating expenses for the second quarter 2013 were RMB13.6 million (US$2.2 million), representing a 12.4% increase from RMB12.1 million in the second quarter of 2012. The increase was mainly due to increased R&D expenditure on new products in the second quarter of 2013.

Operating loss for the second quarter of 2013 was RMB15.9 million (US$2.6 million), compared with operating loss of RMB10.3 million in the same period of 2012.

Net loss attributable to the Company for the second quarter of 2013 was RMB18.2 million (US$3.0 million), compared with net loss attributable to the Company of RMB11.9 million in the second quarter of 2012.

Basic and diluted net loss per share was RMB1.39(US$0.23), compared with basic and diluted net loss per share of RMB0.91 in the second quarter of 2012.

Total shareholders' equity was RMB483.0 million (US$78.7 million) as of June 30, 2013, compared with RMB519.2 million as of December 31, 2012.

As of June 30, 2013, 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 23, 2013, 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: 419304. The replay will be available until September 23, 2013, at 11:59 p.m. EDT.

About Fuwei Films

Fuwei Films conducts its business through its wholly owned subsidiary, Fuwei Films (Shandong) 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.

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 possible delisting of the Company's ordinary shares from the NASDAQ Global Market; 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:

Mr. Yong Jiang
Board Secretary
Phone: +86 158 632 92177
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

SOURCE Fuwei Films (Holdings) Co., Ltd.