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Fuwei Films Announces Fourth Quarter and Full Year 2015 Financial Results
Time:2016/4/8 14:52:16  Source:

Fuwei Films Announces Fourth Quarter and Full Year 2015 Financial Results

-- Teleconference to be Held on Friday, April 8, 2016, at 9:00 a.m. EDT -

BEIJING, April 8, 2016 /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 financial results for the fourth quarter and full year ended December 31, 2015.

Fuwei Films 2015 Highlights

  • Net revenues of RMB248.9 million or US$38.4 million.
  • Net cash used in operating activities was RMB14.0 million or US$2.2 million.
  • Our gross margin was break even for the year of 2015, as compared to a gross loss margin of 6.0% in 2014.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films commented, "2015 was still a challenging year for Fuwei Films with significant competition which created oversupply of BOPET films compared to demand in the market place. As we look to 2016, we intend to capitalize upon opportunities in emerging markets and film technologies by focusing our efforts on continued innovation and R&D and are encouraged by our overseas sales volumes."

"We also previously announced the resignation of Mr. Xiuyong Zhang as Chief Financial Officer who will be replaced by the appointment of Mr. Benjie Dong as the new Chief Financial Officer effective April 1, 2016. Mr. Dong has been a Director of Shandong SNTON Group Co., Ltd. ("SNTON Group") since December 2012, and the Vice President of SNTON Group since October 2005. We would like to thank Mr. Xiuyong Zhang for his tenured service and support his decision to pursue other interests," commented Mr. Zengyong Wang.

Fourth Quarter 2015 Results

Revenues for the fourth quarter of 2015 were RMB63.7 million or US$9.8 million, compared with RMB74.6 million in the fourth quarter of 2014, a decrease of RMB10.9 million, or 14.6%. Sales volume accounted for a decrease of RMB2.5 million while the reduction of average sales price caused a decrease of RMB8.4 million due to the price reduction of main raw materials.

Sales of specialty films for the fourth quarter of 2015 were RMB18.8 million or US$2.9 million, or 29.5% of total revenues, compared with RMB22.5 million or 30.2% of total revenue in the fourth quarter of 2014. The decrease was mainly attributable to decreased selling volumes compared to those in 2014.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2015 and 2014 (amounts in thousands):

   

Three Months Ended

   

December 31,
2015

% of Total

December 31,
2014

% of Total

   

RMB

US$

RMB

Stamping and transfer film

 

31,059

4,794

48.7%

31,461

42.2%

Printing film

 

6,242

964

9.8%

7,373

9.9%

Metallized film

 

2,021

312

3.2%

934

1.3%

Specialty film

 

18,809

2,904

29.5%

22,499

30.2%

Base film for other applications

 

5,576

861

8.8%

12,291

16.5%

             

Total

 

63,707

9,835

100%

74,558

100%

Overseas sales for the fourth quarter of 2015 were RMB10.3 million or US$1.6 million, or 16.2% of total revenues, compared with RMB9.6 million or 12.9% of total revenues in the fourth quarter of 2014. The increase in overseas sales was mainly due to increased selling volumes compared to those in 2014.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2015 and 2014 (amounts in thousands):

   

Three Months Ended

   

December 31,
2015

% of Total

December 31,
2014

% of Total

   

RMB

US$

RMB

Sales in China

 

53,373

8,239

83.8%

64,930

87.1%

Sales in other countries

 

10,334

1,595

16.2%

9,628

12.9%

             

Total

 

63,707

9,835

100%

74,558

100%

Gross profit for the fourth quarter of 2015 was RMB3.7 million or US$0.6 million, representing a gross margin of 5.9%, compared with a gross loss of RMB4.5 million, representing a gross loss margin of 6.0% in the fourth quarter of 2014.

Operating expenses for the fourth quarter of 2015 were RMB24.8 million or US$3.8 million compared with RMB10.6 million or US$1.7 million in the fourth quarter of 2014. This increase is mainly due to the accounting treatment that allocated certain amount of fixed overhead from the cost of goods sold to general and administrative expenses due to the fact that the Company's third production line has not been able to continue its production since April 2015, in addition to an impairment of assets incurred during 2015.

Operating loss for the fourth quarter of 2015 was RMB21.1 million US$3.2 million, compared with an operating loss of RMB15.1 million or US$2.4 million in the fourth quarter of 2014.

Net loss attributable to the Company for the fourth quarter of 2015 was RMB27.2 million or US$4.2 million, compared with net loss attributable to the Company of RMB17.3 million in the fourth quarter of 2014.

Basic and diluted loss per share was RMB2.08 or US$0.32, compared with basic and diluted loss per share of RMB1.33 or US$0.21 in the fourth quarter of 2014.

2015 Full Year Results

During the fiscal year ended December 31, 2015, net revenues were RMB248.9 million or US$38.4 million, compared to RMB284.5 million during the same period in 2014, representing a decrease of RMB35.6 million or 12.5%, mainly due to the reduction of average sales price by 13.5% caused by the decrease in the price of main raw materials. The key factors causing the revenue decrease were attributed to the reduction of average sales price which led to a decrease of RMB38.8 million but was offset by an increase in sales volume of RMB3.2 million.

In 2015, sales of specialty films were RMB73.9 million or US$11.4 million or 29.7% of our total revenues as compared to RMB79.6 million or 28.0% in 2014, which was a decrease of RMB5.7 million, or 7.2%, as compared to the same period in 2014. The decrease was largely attributable to the decrease in average selling prices by 8.9% for dry films and coated films due to the entrance of new competitors.

Overseas sales were RMB54.6 million or US$8.4 million, or 22.0% of total revenues, compared with RMB43.0 million or 15.1% of total revenues in 2014. While the decrease of average sales price caused a decrease of RMB8.0 million, this was offset by the increase of sales volume of RMB19.6 million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2015 and 2014 (amounts in thousands):

 

For the year ended December 31,

   

2015

% of Total

2014

% of Total

   

RMB

US$

RMB

Sales in China

 

194,226

29,984

78.0%

241,446

84.9%

Sales in other countries

 

54,636

8,434

22.0%

43,018

15.1%

   

248,862

38,418

100.0%

284,464

100.0%

Our gross margin was relatively break even for the year of 2015, as compared to a gross loss margin of 6.0% in 2014. Gross margin increased by 6.0 percentage points compared to the same period in 2014. Our average unit sales price decreased by 13.5% compared to last year. The unit sales cost decreased by 18.4% due to the price reduction of main raw materials. Consequently, the decrease in cost of goods sold per unit exceeded that in product sales price during 2015 compared with 2014, which contributed to the increase in gross profit.

Operating expenses during the year ended December 31, 2015 were RMB61.2 million, an increase of RMB17.7 million, or 40.7%, as compared to 2014. This increase is mainly due to the accounting treatment that allocated certain amount of fixed overhead from the cost of goods sold to general and administrative expenses due to the fact that the Company's third production line has not been able to continue its production since April 2015, in addition to an impairment of assets incurred during 2015.

Total other expenses are a combination result of interest income, interest expense and other income (expense). Total other expenses during the year ended December 31, 2015 was RMB0.9 million or US$0.1 million, compared to total other expenses of RMB11.4 million in 2014. This was mainly attributed to decreases in interest expense.

Income tax expense during the year ended December 31, 2015 was RMB7.0 million or US$1.1 million compared to an income tax benefit of RMB0.74 million during 2014, which was mainly attributable to the tax effect of changes in deferred tax during 2015. We only recognized deferred tax assets for the loss of 2015 after considering the possibility of realizing the benefits under the principle of conservatism.

Net loss attributable to the Company for full year 2015 was RMB69.1 million or US$10.7 million, compared with a net loss of RMB71.3 million or US$ 11.5 million in 2014.

Net cash used in operating activities was RMB14.0 million for the year ended December 31, 2015 as compared to net cash used in operating activities of RMB18.2 million for the year ended December 31, 2014.

Cash and cash equivalents on December 31, 2015 was RMB14.4 million or US$2.2 million, compared with RMB9.0 million as of December 31, 2014.

Basic and diluted loss per share for the year ended December 31, 2015 was RMB5.29 or US$0.82.

Conference Call Information

The Company will host a teleconference on Friday, April 8, 2016 at 9:00 am 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: 13633691. The replay will be available until May 8, 2016, at 11:59 p.m. EDT.

About Fuwei Films

Fuwei Films conducts its business through its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"). Fuwei Shandong 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 Capital 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 Manager
Phone: +86-133-615-59266
Email: fuweiIR@fuweifilms.com

In the U.S.:

Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: vivian.chen@grayling.com

 

 

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2015 and 2014

(amounts in thousands, except share and per share data)

 

   

December 31, 2015

 

December 31, 2014

 

RMB

US$

 

RMB

ASSETS

Current assets

         

Cash and cash equivalents

 

14,355

2,216

 

9,020

Restricted cash

 

43,215

6,671

 

48,085

Accounts and bills receivable, net

 

10,046

1,551

 

9,867

Inventories

 

29,574

4,565

 

24,034

Advance to suppliers

 

5,640

871

 

7,512

Prepayments and other receivables

 

20,334

3,139

 

18,772

Deferred tax assets - current

 

1,438

222

 

2,794

Total current assets

 

124,602

19,235

 

120,084

           

Property, plant and equipment, net

 

431,021

66,538

 

482,534

Construction in progress

 

1,700

262

 

366

Lease prepayments, net

 

17,882

2,761

 

18,406

Advance to suppliers - long term, net

 

1,440

222

 

722

Long-term deposit

 

-

-

 

16,760

Other Assets

 

11,607

1,792

 

12,500

Deferred tax assets - non current

 

21,297

3,288

 

21,573

           

Total assets

 

609,549

94,098

 

672,945

           

LIABILITIES AND EQUITY

Current liabilities

         

Short-term borrowings

 

-

-

 

-

Long-term loan, current portion

 

3,350

517

 

3,350

Due to related parties

 

143,080

22,088

 

125,938

Accounts payables

 

32,760

5,057

 

29,484

Notes payable

 

85,780

13,242

 

95,539

Advance from customers

 

2,247

347

 

3,392

Accrued expenses and other payables

 

8,682

1,340

 

6,095

Obligations under capital leases-current

 

302

47

 

8,259

Total current liabilities

 

276,201

42,638

 

272,057

           

Obligations under capital leases

 

-

-

 

303

Long-term loan

 

3,300

509

 

6,650

Deferred tax liabilities

 

5,406

835

 

5,816

           

Total liabilities

 

284,907

43,982

 

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

2,057

 

13,323

Additional paid-in capital

 

311,907

48,150

 

311,907

Statutory reserve

 

37,441

5,780

 

37,441

Retained earnings

 

(38,244)

(5,904)

 

25,043

Cumulative translation adjustment

 

1,049

162

 

1,199

Total shareholders' equity

 

325,476

50,245

 

388,913

Non-controlling interest

 

(834)

(129)

 

(794)

Total equity

 

324,642

50,116

 

388,119

Total liabilities and equity

 

609,549

94,098

 

672,945

             

 

 

 

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2015, 2014 and 2013

(amounts in thousands, except share and per share data)

 

   

The Year Ended December 31,

   

2015

2014

2013

 

RMB

US$

RMB

RMB

Net sales

 

248,862

38,418

284,464

304,950

Cost of sales

 

248,866

38,418

301,617

320,375

           

Gross loss

 

(4)

-

(17,153)

(15,425)

           

Operating expenses:

         

Selling expenses

 

14,404

2,224

15,202

16,839

Administrative expenses

 

39,559

6,107

28,337

32,130

Loss on impairment of assets

 

7,219

1,114

-

-

Total operating expenses

 

61,182

9,445

43,539

48,969

           

Operating loss

 

(61,186)

(9,445)

(60,692)

(64,394)

           

Other income (expense):

         

- Interest income

 

1,236

191

1,297

1,024

- Interest expense

 

(8,333)

(1,286)

(12,486)

(10,094)

- Others income (expense), net

 

6,215

959

(203)

4,505

Total other income (expense)

 

(882)

(136)

(11,392)

(4,565)

           

Loss before provision for income taxes

 

(62,068)

(9,581)

(72,084)

(68,959)

           

Income tax (expense) benefit

 

(1,222)

(189)

740

10,007

           

Net loss

 

(63,290)

(9,770)

(71,344)

(58,952)

           

Net income (loss) attributable to noncontrolling interests

 

(3)

-

(17)

19

Net loss attributable to the Company

 

(63,287)

(9,770)

(71,327)

(58,971)

           

Other comprehensive income (loss):

         

- Foreign currency translation adjustments attributable to noncontrolling interest

 

(37)

(6)

(18)

22

- Foreign currency translation adjustments attributable to the Company

 

(150)

(23)

(67)

44

           

Comprehensive income (loss) attributable to non-controlling interest

 

(40)

(6)

(35)

41

Comprehensive loss attribute to the Company

 

(63,437)

(9,793)

(71,394)

(58,927)

           

Loss per share,
Basic and diluted

 

(4.84)

(0.75)

(5.46)

(4.51)

Weighted average number ordinary shares,
Basic and diluted

 

13,062,500

13,062,500

13,062,500

13,062,500

 

 

 

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2015, 2014 and 2013

(Amounts in thousands)

 

   

The Years Ended December 31,

   

2015

 

2014

2013

   

RMB

US$

 

RMB

RMB

Cash flow from operating activities

           

Net loss

 

(63,290)

(9,770)

 

(71,344)

(58,952)

Adjustments to reconcile net (loss) income to net cash

           

provided by (used in) operating activities

           

- Loss on disposal of property, plant and equipment

 

-

-

 

101

33

- Loss on Long-term assets impairment

 

7,219

1,114

 

-

-

- Depreciation of property, plant and equipment

 

44,515

6,872

 

47,701

48,161

- Amortization of intangible assets

 

524

81

 

524

524

- Deferred income taxes

 

1,222

189

 

303

(10,007)

- Bad debt (recovery) expense

 

(4,484)

(692)

 

30

(1,744)

- Inventory provision

 

(1,106)

(171)

 

-

-

Changes in operating assets and liabilities

           

- Accounts and bills receivable

 

(103)

(16)

 

(1,524)

13,615

- Inventories

 

(4,434)

(684)

 

14,421

(4,164)

- Advance to suppliers

 

2,038

315

 

(535)

7,909

- Prepaid expenses and other current assets

 

1,347

208

 

1,417

(398)

- Accounts payable

 

3,277

506

 

(3,970)

4,658

- Accrued expenses and other payables

 

2,446

378

 

(744)

38

- Advance from customers

 

(1,145)

(177)

 

(11,273)

2,952

- Tax payable

 

(2,016)

(311)

 

6,732

465

             

Net cash provided by (used in) operating activities

 

(13,990)

(2,158)

 

(18,161)

3,090

             

Cash flow from investing activities

           

Purchases of property, plant and equipment

 

(222)

(34)

 

(5,559)

(4,416)

Restricted cash related to trade finance

 

4,884

754

 

(6,656)

(19,974)

Advanced to suppliers - non current

 

(718)

(111)

 

1,412

3,165

Amount change in construction in progress

 

(1,334)

(206)

 

265

(8,785)

Interest capitalization related to CIP

 

-

-

 

-

(2,059)

Deposit for purchase

 

21,000

3,242

 

-

-

             

Net cash used in (provided by) investing activities

 

23,610

3,645

 

(10,538)

(32,069)

             

Cash flow from financing activities

           

Principal payments of bank loans

 

(3,350)

(517)

 

(105,000)

(110,000)

Proceeds from short-term bank loans

 

-

-

 

-

105,000

Proceeds from related party

 

17,142

2,646

 

125,938

-

Payment of capital lease obligation

 

(8,260)

(1,275)

 

(8,315)

(8,123)

Change in notes payable

 

(9,759)

(1,507)

 

13,549

43,691

Proceeds from sale-leaseback equipment

 

-

-

 

-

5,000

             

Net cash provided by (used in) financing activities

 

(4,227)

(653)

 

26,172

35,568

             

Effect of foreign exchange rate changes

 

(58)

(72)

 

(31)

(17)

             

Net (decrease) increase in cash and cash equivalent

 

5,335

762

 

(2,558)

6,572

             

Cash and cash equivalent

           

At beginning of period/year

 

9,020

1,454

 

11,578

5,006

At end of period/year

 

14,355

2,216

 

9,020

11,578

             

SUPPLEMENTARY DISCLOSURE:

           

Interest paid

 

8,333

1,286

 

12,486

12,153

Income tax paid

 

-

-

 

-

-

             

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

           

Account payable for plant and equipment:

 

2,075

320

 

3,070

7,466

Obligations for acquired equipment under capital lease:

 

302

47

 

8,562

16,877