Business News

Fuwei Films Announces Second Quarter 2008 Financial Results

Friday 15. August 2008 - 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 second quarter and first six months of 2008.

Financial Highlights
— In the second quarter of 2008, revenues rose 3.1% to RMB 124.7 million (US$17.9 million) from the same period of 2007.

— In the first six months of 2008, revenues rose 3.9% to RMB 228.8 million (US$32.4 million) from the same period of 2007.

“We hereby release our second quarter of 2008 financial results,” said Xiaoan He, Chairman and CEO of Fuwei Films. “We entered the first half of 2008 with a number of challenges including strong competition in the marketplace, an increase in cost, a decrease in export orders resulting from the anti- dumping cases in Korea and the US, and a decreased average sales price.”

Mr. He continued, “However, we believe that Fuwei Films will be able to continuously utilize the current advantages and the strengthened R&D platform to ensure our leading position in the marketplace.”

Second Quarter 2008 Financial Results

Revenues for the second quarter of 2008 rose 3.1% to RMB 124.7 million (US$17.9 million), from RMB 120.9 million (US$ 15.8 million) in the second quarter of 2007.

Revenues of specialty films in second quarter 2008 were RMB 41.1 million (US$5.9 million), or 33.0% of total revenues.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended June 30, 2008 and June 30, 2007 (amounts in thousands):

Three-month period ended
June 30,2008 June 30,2007
RMB US$ % of Total RMB % of Total

Printing film 12,157 1,747 9.70% 7,552 6.20%
Stamping film 24,759 3,559 19.80% 15,039 12.40%
Metallization film 12,844 1,846 10.30% 27,486 22.70%
Base film for other
applications 33,850 4,866 27.10% 21,681 18.00%
Specialty film 41,136 5,913 33.00% 49,171 40.70%

Total 124,747 17,932 100.00% 120,929 100.00%




Revenues from overseas in the second quarter of 2008 were RMB 8.0 million (US$1.1 million), or 6.4% of total revenues.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended June 30, 2008 and June 30, 2007 (amounts in thousands):

Three-month period ended

June 30,2008 June 30,2007
RMB US$ % of Total RMB % of Total

Sales in China 116,725 16,779 93.60% 82,220 68.00%
Sales in other countries 8,022 1,153 6.40% 38,709 32.00%

Total 124,747 17,932 100.00% 120,929 100.00%



Gross profit for the second quarter of 2008 was RMB 21.9 million (US$3.2 million), compared with RMB 32.7 million (US$4.3 million) in same period 2007. The Company generated a gross margin of 17.6% in the second quarter of 2008, versus 27.0% in the same period of 2007. The decrease in gross margin was due to the decreased average sales price and the increased consumption of raw materials, power and labor.

Operating expenses in the second quarter of 2008 were RMB 9.0 million (US$1.3 million). Selling expenses in the second quarter 2008 decreased to RMB 4.3 million (US$0.6 million) from RMB 5.1 million (US$0.7 million) in the same period 2007. Administrative expenses increased to RMB 4.7 million (US$0.7 million) from RMB 3.9 million (US$0.5 million) in the second quarter of 2007.

Net income for the second quarter of 2008 decreased to RMB 9.7 million (US$1.4million), or diluted EPS of RMB 0.74 (US$0.11), from RMB 20.1 million (US$2.6 million), or diluted EPS of RMB 1.54 (US$0.20) in the same period of 2007.

Six-month 2008 Financial Results

Revenues for the first six months of 2008 rose 3.9% to RMB 228.8 million (US$32.4 million), from RMB 220.2 million (US$28.5 million) in the same period of 2007. Revenues of specialty films in the first six months of 2008 were RMB 74.9 million (US$10.6 million), or 32.7% of total revenues.

The following is a breakdown of commodity and specialty film sales for the six-month periods ended June 30, 2008 and June 30, 2007 (amounts in thousands):

Six-month period ended

June 30,2008 June 30,2007
RMB US$ % of Total RMB % of Total

Printing film 31,370 4,444 13.70% 13,605 6.20%
Stamping film 45,969 6,513 20.10% 27,407 12.50%
Metallization film 15,759 2,233 6.90% 51,072 23.20%
Base film for other
applications 60,780 8,611 26.60% 41,654 18.90%
Specialty film 74,902 10,612 32.70% 86,456 39.30%

Total 228,781 32,413 100.00% 220,194 100.00%



Revenues from overseas in the first six months of 2008 were RMB 31.6 million (US$4.5 million), or 13.8% of total revenues.

The following is a breakdown of domestic versus overseas sales for the six-month periods ended June 30, 2008 and June 30, 2007 (amounts in thousands):

Six-month period ended

June 30,2008 June 30,2007
RMB US$ % of Total RMB % of Total

Sales in China 197,148 27,932 86.20% 148,467 67.40%
Sales in other countries 31,633 4,482 13.80% 71,727 32.60%

Total 228,781 32,413 100.00% 220,194 100.00%



Gross profit for the first six months of 2008 was RMB 43.6 million (US$6.2 million), compared with RMB 56.9 million (US$7.4 million) in same period 2007. The Company generated a gross margin of 19.0% in the first six months of 2008, versus 25.9% in the same period of 2007. The decrease in gross margin was due to the decreased average sales price and the increased consumption of raw materials, power, and labor.

Operating expenses in the first six months of 2008 were RMB 20.2 million (US$2.9 million), compared with RMB 15.2 million (US$2.0 million) in the same period of 2007. The increase was mainly due to increases in allowances for doubtful accounts, domestic transportation expenses, labor costs and expenses related to ongoing litigation etc. Selling expenses in the first six months of 2008 decreased to RMB 7.7 million (US$1.1 million) from RMB 8.8 million (US$1.1 million) in the same period of 2007. Administrative expenses increased to RMB12.4 million (US$1.8 million) from RMB 6.5 million (US$ 0.8 million) in the first half of 2007.

Net income for the first six months of 2008 decreased to RMB 17.6 million (US$2.5 million), or diluted EPS of RMB 1.35 (US$0.19), from RMB 33.4 million (US$4.3 million), or diluted EPS of RMB 2.55 (US$0.33) in the same period of 2007.

Total shareholders’ equity increased to RMB 530.3 million (US$77.3 million) as of June 30, 2008 from RMB 521.1 million (US$74.3 million) as of March 31, 2008.