Fuwei Films Announces Third Quarter of 2019 Unaudited Financial Results

27 November 2019

BEIJING, Nov. 26, 2019 /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-month and nine-month periods ended September 30, 2019.

Third Quarter 2019 Financial Highlights

  • Net sales were RMB79.6 million (US$11.1 million), compared to RMB86.9 million during the same period in 2018.
  • Sales of specialty films were RMB40.6 million (US$5.7 million) or 51.0% of total revenues as compared to RMB45.3 million or 52.2% of total revenues in the same period of 2018.
  • Overseas sales were RMB11.6 million (US$1.6 million) or 14.6% of total revenues, compared with RMB8.5 million or 9.8% of total revenues in the third quarter of 2018.
  • Gross profit was RMB21.6 million (US$3.0 million), representing a gross margin rate of 27.1%, as compared to gross profit of RMB17.1 million and a gross margin rate of 19.6% for the same period in 2018.
  • Net profit attributable to the Company was RMB3.4 million (US$0.5 million), compared to net loss attributable to the Company of RMB1.8 million during the same period in 2018, representing an increase in profit of RMB5.2 million.

First Nine Months 2019 Financial Highlights

  • Net sales were RMB248.8 million (US$34.8 million), compared to RMB243.40 million, during the same period in 2018, representing an increase of RMB5.4 million or 2.2%.
  • Sales of specialty films were RMB114.7 million (US$16.0 million) or 46.1% of total revenues as compared to RMB109.0 million or 44.8% in the same period of 2018.
  • Overseas sales were RMB42.2 million (US$5.9 million) or 16.9% of total revenues, compared with RMB36.1 million or 14.8% of total revenues in the same period in 2018.  
  • Gross profit was RMB52.6 million (US$7.4 million), representing a gross margin of 21.2%, as compared to a gross margin of 13.7% for the same period in 2018.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, "Benefiting from our differentiated product strategy and continuous R&D, we are pleased to continue to operate profitably for the third quarter. Sales of specialty films stayed dominant in wholesales and accounted for 51% of total sales during the quarter. Looking ahead, the BOPET industry remains competitive as a result of higher supply. Nevertheless, we will continue to innovate, tackle overseas markets and execute our differentiated product strategy to improve performance and capture opportunities."

Financial Results for the Three Months Ended September 30, 2019

Net sales during the third quarter ended September 30, 2019 were RMB79.6 million (US$11.1 million), compared to RMB86.9 million during the same period in 2018. The decrease of average sales price caused a decrease of RMB4.6 million and the sales volume decrease caused a decrease of RMB2.7 million.

In the third quarter of 2019, sales of specialty films were RMB40.6 million (US$5.7 million) or 51.0% of total revenues as compared to RMB45.3 million or 52.2% in the same period of 2018. The decrease in average sales price caused a decrease of RMB1.5 million and the decrease in the sales volume caused a decrease of RMB3.2 million.

The following is a breakdown of commodity and specialty film sales (amounts in thousands):



Three-Month Period Ended

September 30, 2019

% of  Total



Three-Month Period Ended

September 30, 2018

% of  Total



RMB

US$





RMB



Stamping and transfer film

26,552

3,715

33.3%



30,650

35.3%

Printing film

7,881

1,103

9.9%



6,293

7.2%

Metallization film

1,197

167

1.5%



773

0.9%

Specialty film

40,559

5,674

51.0%



45,325

52.2%

Base film for other application

3,397

475

4.3%



3,832

4.4%

















79,586

11,134

100.0%



86,872

100.0%

Overseas sales were RMB11.6 million or US$1.6 million, or 14.6% of total revenues, compared with RMB8.5 million or 9.8% of total revenues in the third quarter of 2018. The decrease in average sales price caused a decrease of RMB0.8 million and the increase in sales volume resulted in an increase of RMB3.9 million.

The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):



Three-Month Period Ended

September 30, 2019

% of Total

Three-Month Period Ended

September 30, 2018

% of Total



RMB

US$

RMB

Sales in China

67,933

9,512

85.4%

78,369

90.2%

Sales in other countries

11,593

1,622

14.6%

8,503

9.8%















79,586

11,134

100.0%

86,872

100.0%

Gross profit was RMB21.6 million (US$3.0 million) for the third quarter ended September 30, 2019, representing a gross margin rate of 27.1%, compared to gross profit of RMB17.1 million and a gross margin rate of 19.6% for the same period in 2018. Correspondingly, gross margin rate increased by 7.5 percentage point compared to the same period in 2018.

Operating expenses for the third quarter ended September 30, 2019 were RMB16.3 million (US$2.3 million), which was RMB1.5 million, or 8.4% lower than the same period in 2018. This decrease was mainly due to decreased expenses on research and development.

Net profit attributable to the Company during the third quarter ended September 30, 2019 was RMB3.4million (US$0.5 million), compared to net loss attributable to the Company of RMB1.8 million during the same period in 2018, representing an increase in profit of RMB5.2 million.

Financial Results for the Nine Months Ended September 30, 2019

Net sales during the nine-month period ended September 30, 2019 were RMB248.8 million (US$34.8 million), compared to RMB243.40 million, during the same period in 2018, representing an increase of RMB5.4 million or 2.2%, mainly due to the increase in sales prices in the first nine months of 2019.

In the nine-month period ended September 30, 2019, sales of specialty films were RMB114.7 million (US$16.0 million) or 46.1% of total revenues as compared to RMB109.0 million or 44.8% in the same period of 2018, which was an increase of RMB5.7 million, or 5.2% as compared to the same period in 2018. The increase of average sales price in the first nine months of 2019 caused an increase of RMB1.8 million and the increase in the sales volume caused an increase of RMB3.9 million.

The following is a breakdown of commodity and specialty film sales (amounts in thousands):



Nine-Month Period Ended

September 30, 2019

% of

Total



Nine-Month Period Ended

September 30, 2018

% of Total



RMB

US$





RMB



Stamping and transfer film

86,675

12,126

34.9%



90,930

37.3%

Printing film

28,613

4,003

11.5%



23,874

9.8%

Metallization film

3,811

533

1.5%



2,568

1.1%

Specialty film

114,713

16,049

46.1%



109,020

44.8%

Base film for other applications

14,965

2,094

6.0%



17,006

7.0%

















248,777

34,805

100.0%



243,398

100.0%

Overseas sales during the nine months ended September 30, 2019 were RMB42.2 million or US$5.9 million or 16.9% of total revenues, compared to RMB36.1 million or 14.8% of total revenues in the same period in 2018. This was RMB6.1 million higher than the same period in 2018. The increase in sales volume resulted in an increase of RMB4.7 million and the increase of average sales price caused an increase of RMB1.4 million.

The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):





Nine-Month Period Ended

September 30, 2019

% of Total

Nine-Month Period Ended

September 30, 2018

% of Total





RMB

US$

RMB

Sales in China



206,625

28,907

83.1%

207,291

85.2%

Sales in other countries



42,152

5,898

16.9%

36,107

14.8%



















248,777

34,805

100.0%

243,398

100.0%

Gross profit was RMB52.6 million (US$7.4 million) for the first nine months ended September 30, 2019, representing a gross margin of 21.2%, compared to a gross margin of 13.7% for the same period in 2018. Correspondingly, gross margin increased by 7.5 percentage. Average product sales prices increased by 2.2% compared to the same period last year while the average cost of goods sold decreased by 6.6% compared to the same period last year. This resulted in an increase in gross profit.

Operating expenses for the nine months ended September 30, 2019 were RMB44.9 million (US$6.3 million), compared to RMB47.0 million in the same period in 2018, which was RMB2.1 million or 4.5% lower than the same period in 2018. This decrease was mainly due to decreased expenses on research and development.

Net profit attributable to the Company during the first nine-month period of 2019 was RMB1.0 million (US$0.1 million) compared to net loss attributable to the Company of RMB18.7 million during the same period in 2018, representing an increase of RMB19.7 million from the same period in 2018 due to the factors described above.

Cash, cash equivalent and restricted cash totaled RMB74.9 million or US$10.5 million as of September 30, 2019. Total shareholders' equity was RMB197.9 million or US$27.7 million.

As of September 30, 2019, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Wednesday, November 27, 2019, at 8:00 a.m. ET / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-844-369-8770 in North America, or +1-862-298-0840 internationally, approximately 10 minutes prior to the scheduled start time.

A replay of the call can also be accessed via telephone by calling +1-877-481-4010 in North America, or +1-919-882-2331 internationally, and entering the following Conference ID: 56850. The replay will be available until December 27, 2019, at 8:00 a.m. ET.

About Fuwei Films

Fuwei Films develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, also known as BOPET film. 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 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 uncertainty 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 countries; uncertainty around U.S.-China trade war and its effect on the Company's operation, fluctuations of the RMB exchange rate, 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:

Ms Xiaoli Yu

Investor Relations Officer

Phone: +86-133-615-59266

Email: fuweiIR@fuweifilms.com

In the U.S.:

Mr. Shiwei Yin

Investor Relations

Grayling

Phone: +1-646-284-9474

Email: shiwei.yin@grayling.com

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(amounts in thousands except share and per share value)

(Unaudited)







September 30, 2019



December 31, 2018



RMB

US$



RMB

ASSETS

Current assets











Cash and cash equivalents



50,217

7,026



8,908

Restricted cash



24,700

3,456



38,000

Accounts and bills receivable, net



23,596

3,301



22,627

Inventories



22,135

3,097



24,675

Advance to suppliers



10,527

1,473



5,694

Prepayments and other receivables



1,223

171



1,068

Deferred tax assets – current



1,169

164



1,195

Total current assets



133,567

18,688



102,167













Property, plant and equipment, net



310,101

43,385



331,168

Construction in progress



-

-



366

Lease prepayments, net



15,895

2,224



16,296

Advance to suppliers - long term, net



1,542

216



1,542

Deferred tax assets - non current



3,037

425



3,143













Total assets



464,142

64,938



454,682













LIABILITIES AND EQUITY

Current liabilities











Short-term borrowings



65,000

9,094



64,950

Due to related parties



118,149

16,530



114,692

Accounts payables



21,142

2,958



20,750

Notes payable



49,400

6,911



48,000

Advance from customers



4,306

602



1,859

Accrued expenses and other payables

5,941

831



5,072

Total current liabilities



263,938

36,926



255,323













Deferred tax liabilities



2,352

329



2,528













Total liabilities



266,290

37,255



257,851













Equity











Shareholders' equity











Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding)



13,323

1,864



13,323

Additional paid-in capital



311,907

43,637



311,907

Statutory reserve



37,441

5,238



37,441

Accumulated deficit



(165,659)

(23,177)



(166,680)

Cumulative translation adjustment



840

121



840

Total equity



197,852

27,683



196,831

Total liabilities and equity



464,142

64,938



454,682

  

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(amounts in thousands except share and per share value)

(Unaudited)







The Three-Month Period Ended September 30,

The Nine-Month Period Ended September 30, 







2019



2018

2019



2018



RMB

US$



RMB

RMB

US$



RMB

Net sales



79,586

11,134



86,872

248,777

34,805



243,398

Cost of sales



57,996

8,114



69,812

196,154

27,443



210,051





















Gross profit



21,590

3,020



17,060

52,623

7,362



33,347





















Operating expenses



















Selling expenses



3,236

453



2,960

9,737

1,362



9,325

Administrative expenses



13,083

1,830



14,874

35,113

4,912



37,667

Total operating expenses



16,319

2,283



17,834

44,850

6,274



46,992





















Operating income (loss) 



5,271

737



(774)

7,773

1,088



(13,645)





















Other income (expense)



















- Interest income



255

36



356

671

94



739

- Interest expense



(2,240)

(313)



(2,769)

(6,675)

(934)



(7,227)

- Others income (expense), net



80

11



1,324

(792)

(111)



1,369





















Total other expense



(1,905)

(266)



(1,089)

(6,796)

(951)



(5,119)





















Income (loss) before provision

for income taxes



3,366

471



(1,863)

977

137



(18,764)





















Income tax benefit



77

11



15

44

6



49





















Net income (loss) 



3,443

482



(1,848)

1,021

143



(18,715)









































Other comprehensive loss



















- Foreign currency translation

adjustments



1

0



24

-

-



(2,053)





















Comprehensive income (loss)



3,444

482



(1,824)

1,021

143



(20,768)





















Income (loss) per share,

Basic and diluted

12

1.05

0.15



(0.57)

0.31

0.04



(5.73)

Weighted average number

ordinary shares,

Basic and diluted



3,265,837

3,265,837



3,265,837

3,265,837

3,265,837



3,265,837























 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(amounts in thousands except share and per share value)

(Unaudited)







The Nine-Month Period Ended September 30, 





2019



2018





RMB

US$



RMB

Cash flow from operating activities











Net income (loss)



1,021

143



(18,715)

Adjustments to reconcile net loss to net cash used in operating activities











- Depreciation of property, plant and equipment



33,957

4,751



33,271

- Amortization of intangible assets



400

56



400

- Deferred income taxes



(44)

(6)



(51)

- Bad debt (recovery) expense



(897)

(125)



(132)

-Inventory provision



724

101



-

Changes in operating assets and liabilities 











- Accounts and bills receivable



(72)

(10)



4,682

- Inventories



1,815

254



(1,016)

- Advance to suppliers



(4,833)

(676)



(4,987)

- Prepaid expenses and other current assets



(155)

(22)



(551)

- Accounts payable



393

56



2,436

- Accrued expenses and other payables



501

70



(1,031)

- Advance from customers



2,447

342



6,852

- Tax payable



368

51



1,270













Net cash provided by (used in) operating activities



35,625

4,985



22,428













Cash flow from investing activities











Purchases of property, plant and equipment



(12,889)

(1,803)



(4,812)

Restricted cash related to trade finance



-

-



-

Advance to suppliers - non current



-

-



28

Amount change in construction in progress



366

51



-













Net cash used in investing activities



(12,523)

(1,752)



(4,784)













Cash flow from financing activities











Principal payments of bank loans



-

-



-

Proceeds from short-term bank loans



50

7



14,950

Proceeds from related party



3,457

484



(37,472)

Change in notes payable



1,400

196



23,080













Net cash provided by financing activities



4,907

687



558













Effect of foreign exchange rate changes



-

(261)



(2,041)













Net increase in cash and cash equivalent



28,009

3,659



16,161













Cash and cash equivalent











At beginning of period/year



46,908

6,823



69,464

At end of period/year



74,917

10,482



85,625













SUPPLEMENTARY DISCLOSURE:











Interest paid



6,675

934



7,227

Income tax paid



-

-



-













SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:



1,062

149



1,029

 

 

Cision View original content:http://www.prnewswire.com/news-releases/fuwei-films-announces-third-quarter-of-2019-unaudited-financial-results-300964696.html

SOURCE Fuwei Films (Holdings) Co., Ltd.