BEIJING, Nov. 5, 2015 /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 three and nine months ended September 30, 2015.
Highlights
- Net sales during the third quarter ended September 30, 2015 were RMB65.7 million or US$10.3 million, compared to RMB69.2 million during the same period in 2014.
- Overseas sales were RMB16.1 million or US$2.5 million, or 24.5% of total revenues, compared with RMB11.8 million or 17.1% of total revenues in the third quarter of 2014. The increase in overseas sales was mainly due to the increase in sales volume.
- Gross profit was RMB3.8 million or US$0.6 million for the third quarter ended September 30, 2015, representing a gross margin of 5.8%, as compared to a gross loss rate of 4.5% for the same period in 2014.
- Basic and diluted net loss per share was RMB0.94 or US$0.15 and RMB1.36 for the three-month period ended September 30, 2015 and 2014, respectively.
"We continue to face strong competition from emerging and incumbent players which has created oversupply relative to demand in the marketplace. While this has impacted the Company's financial results, we intend to capitalize upon opportunities in international markets. We believe that our focus on continued innovation and R&D will enable the Company to expand end-user applications and our high-end specialty films while increasing the product portfolio, which we believe, will help us to attract new clients and expand relationships with existing customers. We are encouraged by positive trends in sales volume and gross margins that we expect to enable us to weather different industry and economic conditions in the periods ahead," commented by Mr. Zengyong Wang, the CEO and Chairman of the Company.
Third Quarter 2015 Results
Net sales during the third quarter ended September 30, 2015 were RMB65.7 million or US$10.3 million, compared to RMB69.2 million during the same period in 2014, representing a decrease of RMB3.5 million or 5.1%, mainly due to the reduction of average sales price by 16.2% arising from stronger competition in China and large reduction in prices of main raw materials. The reduction of average sales price caused a decrease of RMB12.6 million and the sales volume increase caused an increase of RMB9.1 million.
In the third quarter of 2015, sales of specialty films were RMB18.7 million or US$2.9 million representing 28.5% of our total revenues as compared to RMB20.7 million or 30.0% in the same period of 2014, which was a decrease of RMB2.0 million, or 9.7% as compared to the same period in 2014. The reduction in average sales price caused a decrease of RMB2.8 million and the increase in the sales volume caused an increase of RMB0.8 million.
Overseas sales were RMB16.1 million or US$2.5 million, or 24.5% of total revenues, compared with RMB11.8 million or 17.1% of total revenues in the third quarter of 2014. This is an increase of RMB4.3 million. The decrease in average sales price caused a decrease of RMB2.6 million and the increase in sales volume resulted in an increase of RMB6.9 million. The increase in overseas sales was mainly due to the increase in sales volume.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):
Three-Month Period Ended | % of Total | Three-Month Period Ended | % of Total | |||
RMB | US$ | RMB | ||||
Sales in China | 49,568 | 7,799 | 75.5% | 57,405 | 82.9% | |
Sales in other countries | 16,102 | 2,534 | 24.5% | 11,812 | 17.1% | |
65,670 | 10,333 | 100.0% | 69,217 | 100.0% |
Our gross profit was RMB3.8 million or US$0.6 million for the third quarter ended September 30, 2015, representing a gross margin of 5.8%, as compared to a gross loss rate of 4.5% for the same period in 2014. Correspondingly, gross profit rate increased by 10.3 percentage points compared to the same period in 2014. Our average product sales prices decreased by 16.2% compared to the same period last year and the average cost of goods sold decreased by 24.4% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold was higher than that in the average sales prices, which resulted in an increase in our gross profit.
Operating expenses for the third quarter ended September 30, 2015 were RMB14.5 million or US$2.3 million, which was RMB2.4 million, or 19.8% higher than the same period in 2014. This increase was mainly due to depreciation charged to general and administrative expenses during the accounting period when the depreciation expense incurred as a result of lack of manufacturing for the third production line in May and June 2015.
Net loss attributable to the Company during the third quarter ended September 30, 2015 was RMB12.3 million or US$1.9 million compared to net loss attributable to the Company of RMB17.8million during the same period in 2014, representing a decrease of RMB5.5 million for the same period in 2014.
Nine Months 2015 Results
Net sales during the nine-month period ended September 30, 2015 were RMB185.2 million or US$29.1 million, compared to RMB209.9 million, during the same period in 2014, representing a decrease of RMB24.7 million or 11.8%, mainly due to the reduction of average sales price by 14.2% arising from stronger competition in China together with reduction in prices of main raw materials.
In the nine-month period ended September 30, 2015, sales of specialty films were RMB55.0 million or US$8.7million or 29.7% of our total revenues as compared to RMB57.1 million or 27.2% in the same period of 2014, which was a decrease of RMB2.1 million, or 3.7% as compared to the same period in 2014. The reduction of average sales price caused a decrease of RMB6.2 million and the increase in the sales volume caused an increase of RMB4.1million.
Overseas sales during the nine months ended September 30, 2015 were RMB44.3 million or US$7.0 million, or 23.9% of total revenues, compared with RMB33.4 million or 15.9% of total revenues in the same period in 2014. This was RMB10.9 million higher than the same period in 2014. The increase in sales volume resulted in an increase of RMB18.7 million and the decrease of average sales price caused a decrease of RMB7.8 million. The increase in overseas sales was mainly due to increases in sales volume.
Our gross loss was RMB3.7 million or US$0.6 million for the first nine months ended September 30, 2015, representing a gross loss rate of 2.0%, as compared to a gross loss rate of 6.0% for the same period in 2014. Correspondingly, gross loss rate decreased by 4.0 percentages. Our average product sales prices decreased by 14.2% compared to the same period last year while the average cost of goods sold decreased by 17.5% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold was higher than that in sales revenue during the nine months ended September 30, 2015 compared with the same period in 2014, which resulted in a decrease in our gross loss.
Operating expenses for the nine months ended September 30, 2015 were RMB36.4 million or US$5.7 million, compared to RMB32.9 million in the same period in 2014, which was RMB3.5 million or 10.6% higher than the same period in 2014. This increase is mainly due to depreciation charged to general and administrative expenses during the accounting period when the depreciation expense incurred as a result of lack of manufacturing for the third production line in May and June 2015.
Basic and diluted net loss per share was RMB0.94 or US$0.15 and RMB1.36 for the three-month period ended September 30, 2015 and 2014, respectively.
Total shareholders' equity was RMB346.9 million or US$54.6 million as of September 30, 2015, compared with RMB388.9 million as of December 31, 2014.
As of September 30, 2015, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.
Conference Call Information
The Company will host a teleconference on Friday, November 6, 2015, at 8:00 a.m. EST / 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: 13624211. The replay will be available until December 6, 2015, at 11:59 p.m. EST.
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; significant competition in the BOPET film industry, especially the significant oversupply of BOPET films resulting from the rapid growth of the Chinese BOPET industry capacity, changes in the international market and trade barriers, especially the adverse impact of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films originating from the People's Republic of China ("China") conducted by certain main importing countries; fluctuations of RMB exchange rate, the reduce in demand for the Company's products or the loss of main customers which may result in the decrease of sales, and negatively influencing the Company's financial performance, uncertainty as to the future profitability, uncertainty as to the Company's ability to successfully obtain additional funds to meet the working capital needs of the new BOPET production line, uncertainty as to the Company's ability to continuously develop new BOPET film products to be produced by the third production line and keep up with changes in BOPET film technology, risks associated with possible defects and errors in its products including complaints and claims from clients, uncertainty as to its ability to protect and enforce its intellectual property rights, uncertainty as to its ability to attract and retain qualified executives and personnel, and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in light of the volatility in the prices of petroleum products in recent years, instability of power and energy supply, and the uncertainty regarding the future operation of the Company in connection with the changes in the labor law in China, the measures taken by the Chinese government to save energy and reduce emissions, and the complaints from nearby residents and local government about the noise caused by our production as well as the uncertainty of the impact of major shareholder transfer that have substantial influence over the Company and the Company's business operation including possible overlap of our BOPET products, customers and market orientation with an BOPET film manufacturer, which is controlled by the same individual who has control over the shares of our major shareholder. 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 SEPTEMBER 30, 2015 AND DECEMBER 31, 2014 (amounts in thousands except share and per share value) (Unaudited)
| |||||
September 30, 2015 | December 31, 2014 | ||||
RMB | US$ | RMB | |||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 13,569 | 2,135 | 9,020 | ||
Restricted cash | 50,548 | 7,953 | 48,085 | ||
Accounts and bills receivable, net | 13,119 | 2,064 | 9,867 | ||
Inventories | 34,689 | 5,458 | 24,034 | ||
Advance to suppliers | 9,198 | 1,447 | 7,512 | ||
Prepayments and other receivables | 21,983 | 3,459 | 18,772 | ||
Deferred tax assets - current | 1,759 | 277 | 2,794 | ||
Total current assets | 144,865 | 22,793 | 120,084 | ||
Property, plant and equipment, net | 449,108 | 70,663 | 482,534 | ||
Construction in progress | 1,289 | 203 | 366 | ||
Lease prepayments, net | 18,012 | 2,834 | 18,406 | ||
Advance to suppliers - long term, net | 1,098 | 173 | 722 | ||
Long-term deposit | - | - | 16,760 | ||
Other Assets | 11,830 | 1,861 | 12,500 | ||
Deferred tax assets - non current | 21,356 | 3,360 | 21,573 | ||
Total assets | 647,558 | 101,887 | 672,945 | ||
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Long-term loan, current portion | 3,350 | 527 | 3,350 | ||
Due to related parties | 141,448 | 22,256 | 125,938 | ||
Accounts payables | 32,508 | 5,115 | 29,484 | ||
Notes payable | 98,266 | 15,461 | 95,539 | ||
Advance from customers | 5,095 | 802 | 3,392 | ||
Accrued expenses and other payables | 8,161 | 1,284 | 6,095 | ||
Obligations under capital leases-current | 1,960 | 308 | 8,259 | ||
Total current liabilities | 290,788 | 45,753 | 272,057 | ||
Obligations under capital leases | - | - | 303 | ||
Long-term loan | 4,975 | 783 | 6,650 | ||
Deferred tax liabilities | 5,705 | 898 | 5,816 | ||
Total liabilities | 301,468 | 47,434 | 284,826 | ||
Equity | |||||
Shareholders' equity | |||||
Registered capital (of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding) | 13,323 | 2,096 | 13,323 | ||
Additional paid-in capital | 311,907 | 49,076 | 311,907 | ||
Statutory reserve | 37,441 | 5,891 | 37,441 | ||
Retained earnings | (16,858) | (2,652) | 25,043 | ||
Cumulative translation adjustment | 1,095 | 171 | 1,199 | ||
Total shareholders' equity | 346,908 | 54,582 | 388,913 | ||
Non-controlling interest | (818) | (129) | (794) | ||
Total equity | 346,090 | 54,453 | 388,119 | ||
Total liabilities and equity | 647,558 | 101,887 | 672,945 | ||
The accompanying notes are an integral part of these unaudited condensed consolidated statements. |
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||
FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2015 AND 2014 | |||||||
(amounts in thousands except share and per share value) | |||||||
(Unaudited) | |||||||
The Three-Month Period Ended | The Nine-Month Period | ||||||
September 30, | Ended September 30, | ||||||
2015 | 2014 | 2015 | 2014 | ||||
RMB | US$ | RMB | RMB | US$ | RMB | ||
Net sales | 65,670 | 10,333 | 69,217 | 185,155 | 29,133 | 209,906 | |
Cost of sales | 61,876 | 9,736 | 72,326 | 188,899 | 29,722 | 222,582 | |
Gross margin (loss) | 3,794 | 597 | (3,109) | (3,744) | (589) | (12,676) | |
Operating expenses | |||||||
Selling expenses | 3,771 | 593 | 4,119 | 10,124 | 1,593 | 10,908 | |
Administrative expenses | 10,774 | 1,695 | 7,979 | 26,264 | 4,132 | 22,037 | |
Total operating expenses | 14,545 | 2,288 | 12,098 | 36,388 | 5,725 | 32,945 | |
Operating loss | (10,751) | (1,691) | (15,207) | (40,132) | (6,314) | (45,621) | |
Other income (expense) | |||||||
- Interest income | 207 | 33 | 392 | 945 | 149 | 1,032 | |
- Interest expense | (2,145) | (337) | (3,140) | (6,558) | (1,032) | (9,564) | |
- Others income (expense), net | 530 | 83 | 98 | 4,982 | 784 | 35 | |
Total other expense | (1,408) | (221) | (2,650) | (631) | (99) | (8,497) | |
Loss before provision for income taxes | (12,159) | (1,912) | (17,857) | (40,763) | (6,413) | (54,118) | |
Income tax benefit (expense) | (97) | (15) | 83 | (1,141) | (180) | 103 | |
Net loss | (12,256) | (1,927) | (17,774) | (41,904) | (6,593) | (54,015) | |
Net loss attributable to noncontrolling interests | (3) | - | (15) | (3) | - | (16) | |
Net loss attributable to the Company | (12,253) | (1,927) | (17,759) | (41,901) | (6,593) | (53,999) | |
Other comprehensive income (loss) | |||||||
- Foreign currency translation adjustments attributable to noncontrolling interest | (21) | (3) | 9 | (21) | (3) | (10) | |
- Foreign currency translation adjustments attributable to the Company | (55) | (9) | 10 | (104) | (16) | (45) | |
Comprehensive income (loss) attributable to non-controlling interest | (24) | (3) | (6) | (24) | (3) | (26) | |
Comprehensive loss attributable to the Company | (12,308) | (1,936) | (17,749) | (42,005) | (6,609) | (54,044) | |
Loss per share, | |||||||
Basic and diluted | (0.94) | (0.15) | (1.36) | (3.21) | (0.51) | (4.13) | |
Weighted average number ordinary shares, | |||||||
Basic and diluted | 13,062,500 | 13,062,500 | 13,062,500 | 13,062,500 | 13,062,500 | 13,062,500 | |
The accompanying notes are an integral part of these unaudited condensed consolidated statements. |
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2015 AND 2014 (amounts in thousands except share and per share value) (Unaudited)
| |||||
The Nine-Month Period Ended September 30, | |||||
2015 | 2014 | ||||
RMB | US$ | RMB | |||
Cash flow from operating activities | |||||
Net loss | (41,904) | (6,593) | (54,015) | ||
Adjustments to reconcile net loss to net cash used in operating activities | |||||
- Depreciation of property, plant and equipment | 33,659 | 5,296 | 36,021 | ||
- Amortization of intangible assets | 393 | 62 | 393 | ||
- Deferred income taxes | 1,141 | 180 | (103) | ||
- Bad debt (recovery) expense | (4,309) | (678) | 261 | ||
Changes in operating assets and liabilities | |||||
- Accounts and bills receivable | (3,350) | (527) | (1,083) | ||
- Inventories | (10,655) | (1,676) | 7,702 | ||
- Advance to suppliers | (1,520) | (239) | 1,536 | ||
- Prepaid expenses and other current assets | (1,140) | (179) | 112 | ||
- Accounts payable | 3,025 | 476 | (8,304) | ||
- Accrued expenses and other payables | 1,980 | 312 | (141) | ||
- Advance from customers | 1,704 | 268 | (4,294) | ||
- Tax payable | (1,401) | (220) | 3,028 | ||
Net cash used in operating activities | (22,377) | (3,518) | (18,887) | ||
Cash flow from investing activities | |||||
Purchases of property, plant and equipment | (233) | (37) | (5,396) | ||
Restricted cash related to trade finance | (2,455) | (386) | (15,272) | ||
Advance to suppliers - non current | (376) | (59) | 937 | ||
Amount change in construction in progress | (923) | (145) | 265 | ||
Return of long-term deposit | 21,000 | 3,304 | - | ||
Net cash provided by (used in) investing activities | 17,013 | 2,677 | (19,466) | ||
Cash flow from financing activities | |||||
Principal payments of bank loans | (1,675) | (264) | (105,000) | ||
Proceeds from related party | 15,510 | 2,440 | 123,849 | ||
Payment of capital lease obligation | (6,602) | (1,039) | (6,185) | ||
Change in notes payable | 2,727 | 429 | 17,939 | ||
Net cash provided by financing activities | 9,960 | 1,566 | 30,603 | ||
Effect of foreign exchange rate changes | (47) | (44) | (21) | ||
Net increase (decrease) in cash and cash equivalent | 4,549 | 681 | (7,771) | ||
Cash and cash equivalent | |||||
At beginning of period/year | 9,020 | 1,454 | 11,578 | ||
At end of period/year | 13,569 | 2,135 | 3,807 | ||
SUPPLEMENTARY DISCLOSURE: | |||||
Interest paid | 6,558 | 1,032 | 9,564 | ||
Income tax paid | - | - | - | ||
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: | |||||
Account payable for plant and equipment: | 2,237 | 352 | 5,886 | ||
Obligations for acquired equipment under capital lease: | 1,960 | 308 | 10,692 | ||
The accompanying notes are an integral part of these unaudited condensed consolidated statements. |
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SOURCE Fuwei Films (Holdings) Co., Ltd.