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Fuwei Films Announces Fourth Quarter and Full Year 2017 Financial Results
Time:2018/4/25 10:26:40  Source:
Fuwei Films Announces Fourth Quarter and Full Year 2017 Financial Results
-     Teleconference to be Held on Tuesday, April 24, 2018, at 9:00 a.m. EDT
BEIJING, April 23, 2018- 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, 2017.
Fuwei Films 2017 Highlights
·         Net revenues were RMB290.7 million or US$44.7 million.
·         Net cash provided by operating activities was RMB10.8 million.
·         Our gross margin was 9.3%.
·         Basic and diluted loss per share was RMB14.09 or US$2.17.
 “We continue to face strong competition from emerging and incumbent players which created oversupply relative to demand in the marketplace in 2017. While this has impacted the Company’s financial results, we are pleased to announce that our sales volume for specialty films has continuously increased. 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.
Fourth Quarter 2017 Results
Revenues for the fourth quarter of 2017 were RMB78.8 million or US$12.1 million, compared with RMB70.9 million in the fourth quarter of 2016, an increase of RMB7.9 million, or 11.1%. Sales volume accounted for a decrease of RMB2.8 million while the increase of average sales price caused an increase of RMB10.7 million.
Sales of specialty films for the fourth quarter of 2017 were RMB32.3 million or US$5.0 million, or 40.9% of total revenues, compared with RMB28.1 million or 39.7% of total revenue in the fourth quarter of 2016. The increase was mainly attributable to increased selling volumes compared to those in 2016.
The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2017 and 2016 (amounts in thousands):
Three months period ended
December 31, 2017
% of Total
December 31, 2016
% of Total
RMB
US$
RMB
Stamping and transfer film
33,357
5,127
42.3%
28,269
39.9%
Printing film
6,152
946
7.8%
4,135
5.8%
Metallized film
1,456
224
1.8%
2,111
3.0%
Specialty film
32,272
4,960
40.9%
28,141
39.7%
Base film for other applications
5,602
861
7.1%
8,247
11.6%
Total
78,839
12,118
100%
70,903
100%
The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2017 and 2016 (amounts in thousands):
Three-month period ended
December 31, 2017
% of Total
December 31, 2016
% of Total
RMB
US$
RMB
Sales in China
67,522
10,378
85.6%
64,186
90.5%
Sales in other countries
11,317
1,739
14.4%
6,717
9.5%
Total
78,839
12,117
100%
70,903
100%
Gross profit for the fourth quarter of 2017 was RMB11.6 million or US$1.8 million, representing a gross margin of 14.7%, compared with a gross profit of RMB5.5 million, representing a gross margin of 7.7% in the fourth quarter of 2016.
Operating expenses for the fourth quarter of 2017 were RMB16.7 million or US$2.6 million compared with RMB17.8 million or US$2.6million in the fourth quarter of 2016.
Operating loss for the fourth quarter of 2017 was RMB5.1 million or US$0.8 million, compared with an operating loss of RMB12.3 million or US$1.8 million in the fourth quarter of 2016.
Net loss attributable to the Companyfor the fourth quarter of 2017 was RMB10.1 million or US$1.6 million, compared with net loss attributable to the Company of RMB18.8 million in the fourth quarter of 2016.
Basic and diluted loss per share was RMB3.10 or US$0.48, compared with basic and diluted loss per share of RMB5.76 or US$0.83 in the fourth quarter of 2016.
2017 Full Year Results
During the fiscal year ended December 31, 2017, net revenues were RMB290.7 million or US$44.7 million, compared to RMB253.9 million during the same period in 2016, representing an increase of RMB36.8 million or 14.5%. For further analysis of the factors causing revenue increase, the increase of average sales price caused an increase of RMB32.0 million and the sales volume factor made an increase of RMB4.8 million.
 
In 2017, sales of specialty films were RMB108.1 million or US$16.6 million or 37.2% of our total revenues as compared to RMB96.1 million or 37.8% in 2016, which was an increase of RMB12.0 million, or 12.5%, as compared to the same period in 2016. The increase was due to the increased sales volume.
 
Overseas sales were RMB55.6 million or US$8.5 million, or 19.1% of total revenues, compared with RMB41.8 million or 16.5% of total revenues in 2016. For further analysis of the factors causing overseas sales increase, the increase of average sales price caused an increase of RMB5.5 million and sales volume factor made an increase of RMB8.3 million.
 
The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2017 and 2016 (amounts in thousands):
For the year ended December 31,
 
2017
% of Total
 
2016
% of Total
RMB
US$
RMB
Sales in China
        235,143
           36,141
80.9%
        212,129
83.5%
Sales in other countries
         55,563
            8,540
19.1%
          41,797
16.5%
         290,706
           44,681
100.0%
         253,926
100.0%
 
 
 
Our gross margin was 9.3% for the year of 2017, as compared to a gross margin of 7.0% in 2016. Gross margin increased by 2.3 percentage points compared to the same period in 2016. Our average unit sales price increased by 12.3% compared to last year. The unit sales cost increased by 9.5% due to the price increase of main raw materials. Consequently, the increase in sales price exceeded that cost of goods sold per unit in product during 2017 compared with 2016, which contributed to the increase in our gross profit.
Total other expense is a combination result of interest income, interest expense and others income (expense). Total other expense during the year ended December 31, 2017 was RMB11.3 million or US$1.7 million, compared to total other expense of RMB6.9 million in 2016. This is mainly attributed to the increased interest.
 
Income tax expense during the year ended December 31, 2017 was RMB0.8 million or US$0.1 million compared to an income tax expense of RMB5.3 million during 2016, which was mainly attributable to tax effect changes in deferred tax during 2017. We only recognized deferred tax assets for the loss of 2017 after considering the possibility of realizing the benefits under the conservatism principle.
 
Net loss attributable to the Company for full year 2017 was RMB46.0 million or US$7.1 million, compared with a net loss of RMB54.5 million in 2016.
 
Net cash provided by operating activities was RMB10.8 million for the year ended December 31, 2017 as compared to net cash used in operating activities of RMB23.2 million for the year ended December 31, 2016.
 
Cash and cash equivalents on December 31, 2017 was RMB12.96 million or US$1.99 million, compared with RMB13.3 million as of December 31, 2016.
Basic and diluted loss per share for the year ended December 31, 2017 was RMB14.09 or US$2.17.
Conference Call Information
The Company will host a teleconference on Tuesday, April 24, 2018 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 +1-877-481-4010 in North America, or +1-919-882-2331 internationally, and entering the following Conference ID: 27774. The replay will be available until May 24, 2018, at 09:00 a.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 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
Citigate Dewe Rogerson
Phone: +1-646-284-9427
Email: 
vivian.chen@citigatedewerogerson.com 
 
 
Financial Tables Follow
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
As of December 31, 2017 and 2016
(amounts in thousands, except share and per share data)
 
December 31, 2017
December 31, 2016
RMB
US$
RMB
ASSETS
Current assets
Cash and cash equivalents
12,963
1,992
13,343
Restricted cash
56,501
8,684
73,421
Accounts and bills receivable, net
20,123
3,093
29,453
Inventories
24,578
3,778
25,153
Advance to suppliers
3,898
599
6,043
Prepayments and other receivables
1,404
216
6,489
Deferred tax assets – current
1,288
198
1,199
Total current assets
120,755
18,560
155,101
Property, plant and equipment, net
371,058
57,031
410,654
Construction in progress
366
56
431
Lease prepayments, net
16,830
2,587
17,358
Advance to suppliers - long term, net
1,570
241
1,861
Deferred tax assets - non current
6,901
1,061
8,032
Total assets
517,480
79,536
593,437
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings
50,000
7,685
60,000
Long-term loan, current portion
-
-
3,300
Due to related parties
151,074
23,220
131,747
Accounts payables
17,470
2,685
20,581
Notes payable
67,900
10,436
100,888
Advance from customers
1,976
304
3,509
Accrued expenses and other payables
5,268
810
5,204
Obligations under capital leases-current
-
-
-
Total current liabilities
293,688
45,140
325,229
Deferred tax liabilities
2,763
425
2,997
Total liabilities
296,451
45,565
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
2,048
13,323
Additional paid-in capital
311,907
47,939
311,907
Statutory reserve
37,441
5,755
37,441
Retained earnings
(144,508)
(22,210)
(98,505)
Cumulative translation adjustment
2,866
439
1,045
Total shareholders’ equity
221,029
33,971
265,211
Total equity
221,029
33,971
265,211
Total liabilities and equity
517,480
79,536
593,437
 
 
 
FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31, 2017, 2016 and 2015
(amounts in thousands, except share and per share data)
 
The Year Ended December 31, 
2017
2016
2015
RMB
US$
RMB
RMB
Net sales
290,706
44,681
253,926
248,862
Cost of sales
263,606
40,516
236,190
248,866
Gross profit (loss)
27,100
4,165
17,736
(4)
Operating expenses:
Selling expenses
14,520
2,232
13,764
14,404
Administrative expenses
46,514
7,149
46,211
39,559
Loss on impairment of assets
-
-
-
7,219
Total operating expenses
61,034
9,381
59,975
61,182
Operating loss
(33,934)
(5,216)
(42,239)
(61,186)
Other income (expense):
- Interest income
725
111
735
1,236
- Interest expense
(9,453)
(1,453)
(7,865)
(8,333)
- Others income (expense), net
(2,533)
(389)
203
6,215
Total other income (expense)
(11,261)
(1,731)
(6,927)
(882)
Loss before provision for income taxes
(45,195)
(6,947)
(49,166)
(62,068)
Income tax (expense) benefit 
(808)
(124)
(5,317)
(7,000)
Net loss 
(46,003)
(7,071)
(54,483)
(69,068)
Net income (loss) attributable to noncontrolling interests
-
-
-
(3)
Net loss attributable to the Company
(46,003)
(7,071)
(54,483)
(69,065)
Other comprehensive income (loss):
- Foreign currency translation adjustments attributable to noncontrolling interest
-
-
-
(37)
- Foreign currency translation adjustments attributable to the Company
1,821
280
(4)
(150)
Comprehensive income (loss) attributable to non-controlling interest
-
-
-
(40)
Comprehensive loss attribute to the Company
(44,182)
(6,791)
(54,487)
(69,215)
Net loss per share,
Basic and diluted
(14.09)
(2.17)
(16.68)
(21.15)
Weighted average number ordinary shares,
Basic and diluted 
3,265,837
3,265,837
3,265,837
3,265,837
 
 
 
 
 
 
 
 


 FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2017, 2016 and 2015
(Amounts in thousands)
The Years Ended December 31, 
2017
2016
2015
RMB
US$
RMB
RMB
Cash flow from operating activities
Net loss
(46,003)
(7,071)
(54,483)
(69,068)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
- Loss on Long-term assets impairment
 -
 -
 -
 7,219
- Depreciation of property, plant and equipment
42,877
6,590
43,193
44,515
- Amortization of intangible assets
528
81
524
524
- Deferred income taxes (benefit)
808
124
5,317
7,000
- Bad debt (recovery) expense
(746)
(115)
2,466
(4,484)
- Inventory provision
1,340
206
(226)
(1,106)
Changes in operating assets and liabilities 
- Investment income recorded on Fuwei Holdings' book
-
-
(1,722)
-
- Accounts and bills receivable
10,075
1,549
(21,873)
(103)
- Inventories
(766)
(118)
4,647
(4,434)
- Advance to suppliers
2,145
330
(403)
2,038
- Prepaid expenses and other current assets
75
12
18
1,347
- Accounts payable
(3,110)
(479)
(12,179)
(9,683)
- Accrued expenses and other payables
128
20
(3,597)
2,446
- Advance from customers
(1,533)
(236)
1,263
(1,145)
- Tax payable
5,009
770
13,827
(2,016)
Net cash provided by (used in) operating activities
10,827
1,663
(23,228)
(26,950)
Cash flow from investing activities
Purchases of property, plant and equipment
(3,282)
(504)
(11,218)
(222)
Restricted cash related to trade finance
16,921
2,601
(30,198)
4,884
Advanced to suppliers - non current
291
45
(421)
(718)
Amount change in construction in progress
65
10
1,269
(1,334)
Deposit for purchase
-
-
-
21,000
Net cash used in (provided by) investing activities
13,995
2,152
(40,568)
23,610
Cash flow from financing activities
Principal payments of bank loans
(3,300)
(507)
(3,350)
(3,350)
Proceeds from short-term bank loans
(10,000)
(1,537)
60,000
-
Proceeds from related party
19,327
2,970
(11,333)
30,102
Payment of capital lease obligation
-
-
(302)
(8,260)
Change in notes payable
(32,988)
(5,070)
15,108
(9,759)
Net cash provided by (used in) financing activities
(26,961)
(4,144)
60,123
8,733
Effect of foreign exchange rate changes
1,759
399
2,661
(58)
Net (decrease) increase  in cash and cash equivalent
(380)
70
(1,012)
5,335
Cash and cash equivalent
At beginning of period/year
13,343
1,922
14,355
9,020
At end of period/year
12,963
1,992
13,343
14,355
SUPPLEMENTARY DISCLOSURE:
Interest paid
9,453
1,453
7,865
8,333
Income tax paid
   -
   -
   -
   -
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:
Account payable for plant and equipment:
1,374
211
1,597
2,075
Obligations for acquired equipment under capital lease:
-
-
-
302