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Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2017
Time:2017/11/30 14:45:34  Source:

Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2017

-Teleconference to be Held on Wednesday, November 29, 2017 at 8:00 am EST-

BEIJING, Nov. 29, 2017 -- 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, 2017.

Highlights

  • Net sales during the third quarter ended September 30, 2017 were RMB73.9 million or US$11.1 million, compared to RMB61.6 million during the same period in 2016, representing an increase of RMB12.3 million or 20.0%.
  • Sales of specialty films in the third quarter ended September 30, 2017 were RMB28.5 million or US$4.3 million or 38.6% of our total revenues as compared to RMB22.7 million or 36.8% in the same period of 2016, which was an increase of RMB5.8 million, or 25.6% as compared to the same period in 2016.
  • Our gross profit was RMB6.7 million or US$1.0 million for the third quarter ended September 30, 2017, representing a gross profit margin of 9.1%, as compared to a gross profit margin of 1.7% for the same period in 2016.
  • Basic and diluted net loss per share was RMB3.70 (US$0.56) and RMB4.11 for the three-month period ended September 30, 2017 and 2016, respectively.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, "While we continue to face strong competition from emerging and incumbent players in the marketplace, which has led to oversupply relative to demand in the marketplace, we are encouraged by positive trends in the increased net sales, especially the sales of specialty films. We believe our commitment to innovation and R&D has expanded our end-user applications that will enable the Company to capitalize on these opportunities despite challenging industry and economic conditions."

Third Quarter 2017 Results

Net sales during the third quarter ended September 30, 2017 were RMB73.9 million or US$11.1 million, compared to RMB61.6 million during the same period in 2016, representing an increase of RMB12.3 million or 20.0%. The increase of average sales price caused an increase of RMB8.7 million and the sales volume increase caused an increase of RMB3.6 million.

In the third quarter of 2017, sales of specialty films were RMB28.5 million or US$4.3 million or 38.6% of our total revenues as compared to RMB22.7 million or 36.8% in the same period of 2016, which was an increase of RMB5.8 million, or 25.6% as compared to the same period in 2016. The increase in average sales price caused an increase of RMB0.1 million and the increase in the sales volume caused an increase of RMB5.7 million.

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

 

Three-Month Period
Ended
September 30, 2017

% of  Total

 

Three-Month Period
Ended
September 30, 2016

% of  Total

 

RMB

US$

   

RMB

 

Stamping  and transfer film

29,588

4,447

40.0%

 

23,715

38.4%

Printing film

7,068

1,062

9.6%

 

7,173

11.7%

Metallization film

1,874

282

2.5%

 

1,634

2.7%

Specialty film

28,487

4,282

38.6%

 

22,666

36.8%

Base film for other application

6,839

1,028

9.3%

 

6,373

10.4%

             
 

73,857

11,101

100.0%

 

61,560

100.0%

Overseas sales were RMB15.2 million or US$2.3 million, or 20.6% of total revenues, compared with RMB11.4 million or 18.4% of total revenues in the third quarter of 2016. This is an increase of RMB3.8 million. The increase in average sales price caused an increase of RMB1.1 million and the increase in sales volume resulted in an increase of RMB2.7 million.

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

   

Three-Month Period
Ended
September 30, 2017

% of Total

Three-Month Period
Ended
September 30, 2016

% of Total

   

RMB

US$

RMB

Sales in China

 

58,614

8,810

79.4%

50,205

81.6%

Sales in other countries

 

15,243

2,291

20.6%

11,355

18.4%

             
   

73,857

11,101

100.0%

61,560

100.0%

Our gross profit was RMB6.7 million or US$1.0 million for the third quarter ended September 30, 2017, representing a gross profit margin of 9.1%, as compared to a gross profit margin of 1.7% for the same period in 2016. Correspondingly, gross profit rate increased by 7.4 percentage point compared to the same period in 2016 mainly due to the increase of average sales price.

Operating expenses for the third quarter ended September 30, 2017 were RMB16.3 million or US$2.5million, which was RMB3.6 million, or 28.3% higher than the same period in 2016. This increase was mainly due to increased expenses on research and development.

Net loss attributable to the Company during the third quarter ended September 30, 2017 was RMB12.1 million or US$1.8 million compared to net loss attributable to the Company of RMB13.4 million during the same period in 2016, representing a decrease in loss of RMB1.3 million.

Basic and diluted net loss per share was RMB3.70 (US$0.56) and RMB4.11 for the three-month period ended September 30, 2017 and 2016, respectively.

Total shareholders' equity was RMB230.32 million or US$34.62 million as of September 30, 2017, compared with RMB265.21 million as of December 31, 2016.

As of September 30, 2017, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.

Nine Months 2017 Results

Net sales during the nine-month period ended September 30, 2017 were RMB211.9 million or US$31.8 million, compared to RMB183.0 million, during the same period in 2016, representing an increase of RMB28.9 million or 15.8%. The increase of average sales price caused an increase of RMB21.3 million and the increase in the sales volume caused an increase of RMB7.6 million.

In the nine-month period ended September 30, 2017, sales of specialty films were RMB75.8 million or US$11.4 million or 35.8% of our total revenues as compared to RMB68.0 million or 37.1% in the same period of 2016, which was an increase of RMB7.8 million, or 11.5% as compared to the same period in 2016. The increase of average sales price caused an increase of RMB0.1 million and the increase in the sales volume caused an increase of RMB7.7 million.

Overseas sales during the nine months ended September 30, 2017 were RMB44.2 million or US$6.7 million, or 20.9% of total revenues, compared with RMB35.1 million or 19.2% of total revenues in the same period in 2016. This was RMB9.2 million higher than the same period in 2016. The increase in sales volume resulted in an increase of RMB5.2 million and the increase of average sales price caused an increase of RMB3.9 million.

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

   

Nine-Month Period
Ended
September 30, 2017

% of Total

Nine-Month Period
Ended
September 30, 2016

% of Total

   

RMB

US$

RMB

Sales in China

 

167,622

25,193

79.1%

147,944

80.8%

Sales in other countries

 

44,245

6,651

20.9%

35,079

19.2%

             
   

211,867

31,844

100.0%

183,023

100.0%

Our gross profit was RMB15.5 million or US$2.3 million for the first nine months ended September 30, 2017, representing a gross profit margin of 7.3%, as compared to a gross profit margin of 6.7% for the same period in 2016. Correspondingly, gross profit rate increased by 0.6 percentage points. Our average product sales prices increased by 11.2% compared to the same period last year while the average cost of goods sold increased by 10.5% compared to the same period last year. Consequently, the amount of increase in sales price was higher than that in cost of goods sold during the nine months ended September 30, 2017 compared with the same period in 2016, which resulted in an increase in our gross profit.

Operating expenses for the nine months ended September 30, 2017 were RMB44.3 million or US$6.7 million, compared to RMB42.2 million in the same period in 2016, which was RMB2.1 million or 5.0% higher than the same period in 2016. This increase is mainly due to increased expenses on research and development.

Conference Call Information

The Company will host a teleconference on Wednesday, November 29, 2017, 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 +1-877-481-4010 in North America, or +1-919-882-2331internationally, and entering the following Conference ID: 22811. The replay will be available until December 29, 2017, at 8:00 a.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'sBOPET 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
Citigate Dewe Rogerson
Phone: +1-646-284-9427
Email: vivian.chen@citigatedewerogerson.com

 

Financial Tables to Follow

 

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

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

(amounts in thousands except share and per share value)

(Unaudited)

   

September 30, 2017

 

December 31, 2016

 

RMB

US$

 

RMB

ASSETS

Current assets

         

Cash and cash equivalents

 

23,720

3,565

 

13,343

Restricted cash

 

72,551

10,905

 

73,421

Accounts and bills receivable, net

 

23,151

3,480

 

29,453

Inventories

 

21,419

3,219

 

25,153

Advance to suppliers

 

11,634

1,749

 

6,043

Prepayments and other receivables

 

1,696

255

 

6,489

Deferred tax assets – current

 

1,298

195

 

1,199

Total current assets

 

155,469

23,368

 

155,101

           

Property, plant and equipment, net

 

382,344

57,467

 

410,654

Construction in progress

 

366

55

 

431

Lease prepayments, net

 

16,963

2,550

 

17,358

Advance to suppliers - long term, net

 

1,700

256

 

1,861

Deferred tax assets - non current

 

7,926

1,191

 

8,032

           

Total assets

 

564,768

84,887

 

593,437

           

LIABILITIES AND EQUITY

Current liabilities

         

Short-term borrowings

 

65,000

9,770

 

60,000

Long-term loan, current portion

 

1,625

244

 

3,300

Due to related parties

 

134,413

20,202

 

131,747

Accounts payables

 

19,544

2,937

 

20,581

Notes payable

 

100,000

15,030

 

100,888

Advance from customers

 

5,530

831

 

3,509

Accrued expenses and other payables

5,507

828

 

5,204

Total current liabilities

 

331,619

49,842

 

325,229

           

Deferred tax liabilities

 

2,822

424

 

2,997

           

Total liabilities

 

334,441

50,266

 

328,226

           

Equity

         

Shareholders' equity

         

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

 

13,323

2,002

 

13,323

Additional paid-in capital

 

311,907

46,880

 

311,907

Statutory reserve

 

37,441

5,627

 

37,441

Retained earnings

 

(134,382)

(20,198)

 

(98,505)

Cumulative translation adjustment

 

2,038

310

 

1,045

Total shareholders' equity

 

230,327

34,621

 

265,211

Total equity

 

230,327

34,621

 

265,211

Total liabilities and equity

 

564,768

84,887

 

593,437

 

 

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2017 AND 2016

(amounts in thousands except share and per share value)

(Unaudited)

 
 

The Three-Month Period Ended September 30, 

 

The Nine-Month Period Ended September 30,  

 

2017

 

2016

 

2017

 

2016

 

RMB

US$

 

RMB

 

RMB

US$

 

RMB

Net sales 

73,857

11,101

 

61,560

 

211,867

31,844

 

183,023

Cost of sales 

67,145

10,092

 

60,504

 

196,373

29,515

 

170,752

                   

Gross profit (loss)

6,712

1,009

 

1,056

 

15,494

2,329

 

12,271

                   

Operating expenses 

                 

Selling expenses 

3,410

513

 

3,193

 

10,617

1,596

 

9,482

Administrative expenses 

12,917

1,941

 

9,497

 

33,669

5,060

 

32,694

Total operating expenses 

16,327

2,454

 

12,690

 

44,286

6,656

 

42,176

                   

Operating loss  

(9,615)

(1,445)

 

(11,634)

 

(28,792)

(4,327)

 

(29,905)

                   

Other income (expense) 

                 

- Interest income 

103

16

 

200

 

607

91

 

552

- Interest expense 

(2,244)

(337)

 

(2,030)

 

(7,097)

(1,067)

 

(5,491)

- Others income (expense), net 

(374)

(56)

 

26

 

(763)

(115)

 

(1,328)

                   

Total other expense

(2,515)

(377)

 

(1,804)

 

(7,253)

(1,091)

 

(6,267)

                   

Loss before provision for income taxes 

(12,130)

(1,822)

 

(13,438)

 

(36,045)

(5,418)

 

(36,172)

                   

Income tax benefit (expense)

54

8

 

10

 

168

25

 

492

                   

Net loss  

(12,076)

(1,814)

 

(13,428)

 

(35,877)

(5,393)

 

(35,680)

                   

Net loss attributable to noncontrolling interests 

-

-

 

-

 

-

-

 

-

Net loss attributable to the Company 

(12,076)

(1,814)

 

(13,428)

 

(35,877)

(5,393)

 

(35,680)

                   

Other comprehensive income (loss)

                 

- Foreign currency translation adjustments attributable to noncontrolling interest

-

-

 

(2)

 

-

-

 

(24)

- Foreign currency translation adjustments attributable to the Company

1,206

181

 

(9)

 

993

149

 

(88)

                   

Comprehensive loss attributable to non-controlling interest

-

-

 

(2)

 

-

-

 

(24)

Comprehensive loss attributable to the Company

(10,870)

(1,633)

 

(13,437)

 

(34,884)

(5,244)

 

(35,768)

                   

Loss per share, Basic and diluted 

(3.70)

(0.56)

 

(4.11)

 

(10.99)

(1.65)

 

(10.93)

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, 2017 AND 2016

(amounts in thousands except share and per share value)

(Unaudited)

 
   

The Nine-Month Period Ended September 30, 

   

2017

 

2016

   

RMB

US$

 

RMB

Cash flow from operating activities

         

Net loss

 

(35,877)

(5,392)

 

(35,680)

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

         

- Depreciation of property, plant and equipment

 

32,334

4,860

 

32,122

- Amortization of intangible assets

 

394

59

 

393

- Deferred income taxes

 

(168)

(25)

 

(492)

- Bad debt (recovery) expense

 

714

107

 

1,670

-Inventory provision

 

(57)

(9)

 

(226)

Changes in operating assets and liabilities 

         

- Accounts and bills receivable

 

5,589

840

 

(14,219)

- Inventories

 

3,790

570

 

2,968

- Advance to suppliers

 

(5,591)

(840)

 

(2,580)

- Prepaid expenses and other current assets

 

100

15

 

79

- Accounts payable

 

(1,037)

(157)

 

540

- Accrued expenses and other payables

 

354

53

 

(1,450)

- Advance from customers

 

2,021

304

 

370

- Tax payable

 

4,693

705

 

10,952

           

Net cash provided by (used in) operating activities

 

7,259

1,090

 

(5,553)

           

Cash flow from investing activities

         

Purchases of property, plant and equipment

 

(4,024)

(605)

 

(11,064)

Restricted cash related to trade finance

 

871

131

 

(27,521)

Advance to suppliers - non current

 

161

24

 

(478)

Amount change in construction in progress

 

65

10

 

1,293

           

Net cash used in investing activities

 

(2,927)

(440)

 

(37,770)

           

Cash flow from financing activities

         

Principal payments of bank loans

 

(1,675)

(252)

 

(1,675)

Proceeds from short-term bank loans

 

5,000

752

 

45,000

Proceeds from related party

 

2,666

401

 

(22,401)

Payment of capital lease obligation

 

-

-

 

(302)

Change in notes payable

 

(888)

(133)

 

24,053

           

Net cash provided by financing activities

 

5,103

768

 

44,675

           

Effect of foreign exchange rate changes

 

942

225

 

(28)

           

Net increase in cash and cash equivalent

 

10,377

1,643

 

1,324

           

Cash and cash equivalent

         

At beginning of period/year

 

13,343

1,922

 

14,355

At end of period/year

 

23,720

3,566

 

15,679

           

SUPPLEMENTARY DISCLOSURE:

         

Interest paid

 

7,097

1,067

 

5,491

Income tax paid

 

-

-

 

-

           

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:

 

2,040

307

 

2,172

Obligations for acquired equipment under capital lease:

 

-

-

 

-