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Fuwei Films Announces Second Quarter and First Half 2018 Unaudited Financial Results
Time:2018/8/24 13:27:20  Source:

 

Fuwei Films Announces Second Quarter and First Half 2018 Unaudited Financial Results
-Teleconference to be held on Friday, August 24, 2018 at 9:00 am EDT-
BEIJING, August 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 unaudited financial results for the three-month and six-month periods ended June 30, 2018.
Second Quarter 2018 Financial Highlights
Net sales during the second quarter ended June 30, 2018 increased to RMB79.6 million or US$12.0 million from RMB70.1 million last year;
Sales of specialty films were RMB30.7 million or US$4.6 million or 38.6% of our total revenues;
Overseas sales were RMB16.6 million or US$2.5 million;
Our gross profit grew to RMB6.8 million or US$1.0 million from RMB5.0 million last year; gross margin was 8.5% compared to 7.2% last year.
First Six Months 2018 Financial Highlights
Net sales during the first six months ended June 30, 2018 were RMB156.5 million or US$23.7 million from RMB138.0 million last year;
Sales of specialty films were RMB63.7 million or US$9.6 million or 40.7% of our total revenues;
Overseas sales were RMB27.6 million or US$4.2 million;
Our gross profit grew to RMB16.3 million or US$2.5 million from RMB8.8 million last year; gross margin was 8.5% compared to 6.4% last year.
Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, “Our second quarter results reflect the intense competition as a result of excess capacity in the BOPET industry. In spite of this, I am pleased to share that our differentiated product strategy is showing results and sales of specialty films continued to grow. Riding on this positive momentum, we will work toward expanding our customer base through introducing innovative products and exploring overseas markets. We believe that capturing opportunities in new and emerging markets will help strengthen our competitive position.”
Financial Results for the Three Months Ended June 30, 2018
Net sales during the second quarter were RMB79.6 million (US$12.0 million), compared to RMB70.1 million during the same period in 2017, representing an increase of RMB9.5 million or 13.6%. The increase of average sales price caused an increase of RMB8.1 million and the sales volume increase caused an increase of RMB1.4 million.
In the second quarter of 2018, sales of specialty films were RMB30.7 million (US$4.6 million) or 38.6% of our total revenues as compared to RMB25.6 million or 36.5% in the same period of 2017, which was an increase of RMB5.1 million, or 19.9% as compared to the same period in 2017. The increase of average sales price caused an increase of RMB0.3 million and the increase in the sales volume caused an increase of RMB4.8 million. The increase was largely attributable to the increase in sales volume.
The following is a breakdown of commodity and specialty film sales (amounts in thousands):

Three-Month Period Ended
 June 30, 2018
% of Total
Three-Month Period Ended
June 30, 2017
% of Total
RMB
US$
RMB
29,428
4,446
37.0%
 
26,378
37.7%
Printing film
11,713
1,770
14.7%
 
5,289
7.5%
Metallization film
622
94
0.8%
 
2,483
3.5%
Specialty film
30,748
4,647
38.6%
 
25,568
36.5%
Base film for other application
7,088
1,072
8.9%
 
10,347
14.8%
79,599
12,029
100.0%
70,066
100.0%

 
Overseas sales were RMB16.6 million or US$2.5 million, or 20.9% of total revenues, compared with RMB15.8 million or 22.5% of total revenues in the second quarter of 2017. The increase of average sales price caused an increase of RMB1.4 million and the decrease in sales volume resulted in a decrease of RMB0.8 million.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):
 

 
Three-Month Period Ended
 June 30, 2018
% of Total
Three-Month Period Ended
June 30, 2017
% of Total
RMB
US$
RMB
Sales in China
62,994
9,520
79.1%
54,277
77.5%
Sales in other countries
16,605
2,509
20.9%
15,789
22.5%
79,599
 12,029
100.0%
               70,066
100.0%

 
Our gross profit was RMB6.8 million (US$1.0 million) for the second quarter, representing a gross profitrate of 8.5%, as compared to a gross profit rate of 7.2% for the same period in 2017. Correspondingly, gross profit rate increased by 1.3 percentage point compared to the same period in 2017. Our average product sales prices increased by 11.3% compared to the same period last year while the average cost of goods sold increased by 9.7% compared to the same period last year. Consequently, the amount of increase in average cost of goods sold was lower than that in average product sales prices during the second quarter ended June 30, 2018 compared with the same period in 2017, which resulted in an increase in our gross profit.
Operating expenses for the second quarter were RMB13.3 million (US$2.0 million), compared to RMB14.2 million for the same period in 2017.
Net loss attributable to the Company during the second quarter was RMB8.7 million (US$1.3 million) compared to net loss attributable to the Company of RMB11.6 million during the same period in 2017, representing a decrease of RMB2.9 million for the same period in 2017.
Financial Results for the Six Months Ended June 30, 2018
Net sales during the first six months were RMB156.5 million (US$23.7 million), compared to RMB138.0 million in the same period in 2017, representing an increase of RMB18.5 million or 13.4%. The increase in average sales price caused an increase of RMB17.1 million and the increase in the sales volume caused an increase of RMB1.4 million.
In the first six months, sales of specialty films were RMB63.7 million (US$9.6 million) or 40.7% of our total revenues as compared to RMB47.3 million or 34.3% in the same period of 2017, which was an increase of RMB16.4 million, or 34.7% as compared to the same period in 2017. The increase was mainly due to the increase of sales volume.
The following is a breakdown of commodity and specialty film sales (amounts in thousands):

Six-Month Period Ended
 June 30, 2018
% of Total
Six-Month Period Ended
June 30, 2017
% of Total
RMB
US$
RMB
Stamping and transfer film
60,281
9,110
38.6%
53,450
38.7%
Printing film
17,581
2,657
11.2%
11,559
8.4%
Metallization film
1,795
271
1.1%
5,101
3.7%
Specialty film
63,695
9,626
40.7%
47,330
34.3%
Base film for other application
13,174
1,991
8.4%
20,570
14.9%
156,526
23,655
100.0%
138,010
100.0%

 
Overseas sales during the first six months were RMB27.6 million or US$4.2 million, or 17.6% of total revenues, compared with RMB29.0 million or 21.0% of total revenues in the same period in 2017. This was RMB1.4 million lower than the same period in 2017. The decrease in sales volume resulted in a decrease of RMB3.6 million and the increase in average sales price caused an increase of RMB2.2 million.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):

 
Six-Month Period Ended
 June 30, 2018
% of Total
Six-Month Period Ended
June 30, 2017
% of Total
RMB
US$
RMB
Sales in China
128,922
 19,483
82.4%
109,008
79.0%
Sales in other countries
27,604
 4,172
17.6%
29,002
21.0%
 156,526
 23,655
100.0%
       138,010
100.0%

 
Our gross margin was RMB16.3 million (US$2.5 million) for the first six months, representing a gross margin rate of 10.4%, as compared to a gross margin rate of 6.4% for the same period in 2017. Correspondingly, gross margin rate increased by 4.0 percentage points. Our average product sales prices increased by 12.3% compared to the same period last year while the average cost of goods sold increased by 7.4% compared to the same period last year. Consequently, the amount of increase in average product sales prices was higher than that in cost of goods sold during the six months ended June 30, 2018 compared with the same period in 2017, which resulted in an increase in our gross margin.
Operating expenses for the first six months were RMB29.2 million (US$4.4 million), compared to RMB28.0 million in the same period in 2017, which was RMB1.2 million or 4.3% higher than the same period in 2017. This increase was mainly due to increased expenses on R&D.
Net loss attributable to the Company during the first six months was RMB16.9 million (US$2.5 million) compared to net loss attributable to the Company of RMB23.8 million during the same period in 2017, representing a decrease of RMB6.9 million from the same period in 2017 due to the factors described above.
Cash, cash equivalent and restricted cash totaled RMB62.9 million or US$9.5 million as of June 30, 2018. Total shareholders’ equity was RMB202.1 million or US$30.5 million.
As of June 30, 2018, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.
Conference Call Information
The Company will host a teleconference on Friday, August 24, 2018, at 9:00 a.m. 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 reply ID: 37084. The replay will be available until September 24, 2018, at 09:00 a.m. EDT.
 
 
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 both the short and long-term effects of the global financial crisis on the Company and the BOPET film industry; competition in the BOPET film industry; growth of, and risks inherent in, the BOPET film industry in China; uncertainty as to future profitability 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 JUNE 30, 2018 AND DECEMBER 31, 2017
(amounts in thousands except share and per share value)
(Unaudited)
 

June 30, 2018
December 31, 2017
RMB
US$
RMB
ASSETS
Current assets
Cash and cash equivalents
24,861
3,757
12,963
Restricted cash
37,990
5,741
56,501
Accounts and bills receivable, net
18,653
2,819
20,123
Inventories
17,560
2,654
24,578
Advance to suppliers
5,254
794
3,898
Prepayments and other receivables
1,294
196
1,404
Deferred tax assets - current
1,277
193
1,288
Total current assets
106,889
16,154
120,755
Property, plant and equipment, net
348,807
52,713
371,058
Construction in progress
2,478
374
366
Lease prepayments, net
16,563
2,503
16,830
Advance to suppliers - long term, net
1,542
233
1,570
Deferred tax assets - non current
6,831
1,032
6,901
Total assets
483,110
73,009
517,480
Current liabilities
Short-term borrowings
65,000
9,823
50,000
Due to related parties
112,914
17,064
151,074
Accounts payables
22,934
3,466
17,470
Notes payable
67,980
10,273
67,900
Advance from customers
3,258
492
1,976
6,292
951
5,268
Total current liabilities
278,378
42,069
293,688
Deferred tax liabilities
2,646
400
2,763
Total liabilities
281,024
42,469
296,451
Equity
Shareholders’ equity
Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding)
13,323
2,013
13,323
Additional paid-in capital
311,907
47,137
311,907
Statutory reserve
37,441
5,658
37,441
Accumulated deficit
(161,374)
(24,387)
(144,508)
Cumulative translation adjustment
789
119
2,866
Total shareholders’ equity
202,086
30,540
221,029
Total equity
202,086
30,540
221,029
Total liabilities and equity
483,110
73,009
517,480

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017
(amounts in thousands except share and per share value)
(Unaudited)
 
 

The Three-Month Period Ended June 30,
 
The Six-Month Period Ended June 30, 
2018
2017
 
2018
2017
RMB
US$
RMB
 
RMB
US$
RMB
Net sales
79,599
12,029
70,066
 
156,526
23,655
138,010
Cost of sales
72,803
11,002
65,041
 
140,239
21,193
129,228
 
Gross margin
6,796
1,027
5,025
 
16,287
2,462
8,782
 
Operating expenses
 
Selling expenses
3,395
513
3,701
 
6,365
962
7,207
Administrative expenses
9,916
1,499
10,486
 
22,792
3,444
20,752
Total operating expenses
13,311
2,012
14,187
 
29,157
4,406
27,959
 
Operating loss
(6,515)
(985)
(9,162)
 
(12,870)
(1,944)
(19,177)
 
Other income (expense)
 
- Interest income
10
1
217
 
383
58
503
- Interest expense
(2,257)
(341)
(2,407)
 
(4,458)
(674)
(4,853)
- Others income (expense), net
282
43
(342)
 
45
7
(389)
Total other expenses
(1,965)
(297)
(2,532)
 
(4,030)
(609)
(4,739)
 
Loss before provision for income taxes
(8,480)
(1,282)
(11,694)
 
(16,900)
(2,553)
(23,916)
Income tax benefit (expense)
(176)
(27)
49
 
34
5
114
 
Net loss
(8,656)
(1,309)
(11,645)
 
(16,866)
(2,548)
(23,802)
 
Net (loss) income attributable to non-controlling interests
-
-
-
 
-
-
-
Net loss attributable to the Company
(8,656)
(1,309)
(11,645)
 
(16,866)
(2,548)
(23,802)
Other comprehensive income (loss)
 
- Foreign currency translation adjustments attributable to non-controlling interest
-
-
-
 
-
-
-
- Foreign currency translation adjustments attributable to the Company
(36)
(5)
(487)
 
(2,077)
(314)
(211)
 
Comprehensive loss attributable to non-controlling interest
-
-
-
 
-
-
Comprehensive loss attributable to the Company
(8,692)
(1,314)
(12,132)
 
(18,943)
(2,862)
(24,013)
 
Loss per share,
Basic and diluted
(2.65)
(0.40)
(3.57)
 
(5.16)
(0.78)
(7.29)
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 SIX-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017
(amounts in thousands except share and per share value)
(Unaudited)
 

The Six-Month Period Ended June 30, 
2018
2017
RMB
US$
RMB
Cash flow from operating activities
Net loss
(16,866)
(2,548)
(23,802)
Adjustments to reconcile net loss to net cash
used in operating activities
- Depreciation of property, plant and equipment
22,127
3,344
21,728
- Amortization of intangible assets
266
40
262
- Deferred income taxes
(36)
(5)
(114)
- Bad debt recovery
(70)
(11)
512
-Inventory provision
-
-
(57)
Changes in operating assets and liabilities 
- Accounts and bills receivable
1,541
233
(98)
- Inventories
7,019
1,061
303
- Advance to suppliers
(1,356)
(205)
(30)
- Prepaid expenses and other current assets
(65)
(10)
(1,104)
- Accounts payable
5,463
825
(1,489)
- Accrued expenses and other payables
(27)
(4)
288
- Advance from customers
1,282
194
171
- Tax payable
1,216
184
3,959
Net cash provided by (used in) operating activities
20,494
3,098
529
Cash flow from investing activities
Purchases of property, plant and equipment
124
19
(447)
Restricted cash related to trade finance
18,511
2,797
43,421
Advanced to suppliers - non current
28
4
(257)
Amount change in construction in progress
(2,112)
(319)
(2,157)
Net cash provided by (used in) investing activities
16,551
2,501
40,560
Cash flow from financing activities
Principal payments of bank loans
 -
 -
 (1,675)
Proceeds from (payment to) short-term bank loans
15,000
2,267
(10,500)
Proceeds from (payment to) related party
(38,160)
(5,767)
15,322
Change in notes payable
80
12
(40,888)
Net cash (used in) provided by financing activities
(23,080)
(3,488)
(37,741)
Effect of foreign exchange rate changes
(2,067)
(346)
(239)
Net increase in cash and cash equivalent
11,898
1,765
3,109
Cash and cash equivalent
At beginning of period
12,963
1,992
13,343
At end of period
24,861
3,757
16,452
SUPPLEMENTARY DISCLOSURE:
Interest paid
4,458
674
4,853
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:
Account payable for plant and equipment:
1,008
152
1,398