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Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2018
Time:2018/11/28 13:31:52  Source:

 

Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2018
-Teleconference to be Held on Wednesday, November 28, 2018 at 8:00 am ET-
BEIJING, November 27, 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 and nine months ended September 30, 2018.
Third Quarter 2018 Financial Highlights
 
§ Net sales during the third quarter ended September 30, 2018 increased to RMB86.9 million or US$12.6 million from RMB73.9 million last year.
§ Sales of specialty films were RMB45.3 million (US$6.6 million) or 52.2% of our total quarterly revenues.
§ Gross profit grew to RMB17.1 million (US$2.5 million) from RMB6.7 million a year ago; gross margin was 19.6%t compared to 9.1% last year.  
§ Net loss attributable to the Company was RMB1.8 million (US$0.3 million) compared to net loss of RMB12.1 million during the same period in 2017, representing a decrease in loss of RMB10.3 million.
§ Basic and diluted net loss per share was RMB0.57 or US$0.08.
 
First Nine Months 2018 Financial Highlights
 
§ Net sales during the first nine months ended September 30, 2018 increased to RMB243.4 million or US$35.4 million from RMB211.9 million last year.
§ Sales of specialty films were RMB109.0 million (US$15.9 million) or 44.8% of total revenues during the period.
§ Gross profit grew to RMB33.3 million (US$4.9 million) from RMB15.5 million a year ago; gross margin was 13.7%t compared to 7.3% last year.  
§ Net loss attributable to the Company was RMB18.7 million (US$2.7 million) compared to net loss of RMB35.9 million during the same period in 2017, representing a decrease in loss of RMB17.2 million.
§ Basic and diluted net loss per share was RMB5.73 or US$0.83.
 
Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, “While we continued to be adversely affected by intense competition and increased supply over demand in China’s BOPET market, our net sales and the sales of specialty films increased. We are glad to announce that the sales of specialty films accounted for 52.2% of the total revenues for the third quarter of 2018. We believe the improvement of our financial metrics benefits from continued implementation of differentiation strategy. Looking ahead, encouraged by this positive trend, we believe our commitment to innovation and R&D will enable us to capitalize on market opportunities and as a result expect to realize profits despite challenging industry and economic conditions.”
Third Quarter 2018 Results
Net sales during the third quarter ended September 30, 2018 were RMB86.9 million (US$12.6 million), compared to RMB73.9 million during the same period in 2017, representing an increase of RMB13.0 million or 17.6%. The increase of average sales price caused an increase of RMB18.6 million and the sales volume decrease caused a decrease of RMB5.6 million.
In the third quarter of 2018, sales of specialty films were RMB45.3 million (US$6.6 million) or 52.2% of our total revenues as compared to RMB28.5 million or 38.6% in the same period of 2017, which was an increase of RMB16.8 million, or 58.9% as compared to the same period in 2017. The increase in average sales price caused an increase of RMB2.9 million and the increase in the sales volume caused an increase of RMB13.9 million.
The following is a breakdown of commodity and specialty film sales (amounts in thousands):
 

Three-Month Period Ended
September 30, 2018
% of Total
Three-Month Period Ended
September 30, 2017
% of Total
RMB
US$
RMB
Stamping and transfer film
30,650
4,464
35.3%
29,588
40.0%
Printing film
6,293
916
7.2%
7,068
9.6%
Metallization film
773
112
0.9%
1,874
2.5%
Specialty film
45,325
6,599
52.2%
28,487
38.6%
Base film for other application
3,832
558
4.4%
6,839
9.3%
86,872
12,649
100.0%
73,857
100.0%

 
Overseas sales were RMB8.5 million or US$1.2 million, or 9.8% of total revenues, compared with RMB15.2 million or 20.6% of total revenues in the third quarter of 2017. The increase in average sales price caused an increase of RMB2.3 million and the decrease in sales volume resulted in a decrease of RMB9.0 million.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):
 

 
Three-Month Period Ended
September 30, 2018
% of Total
Three-Month Period Ended
September 30, 2017
% of Total
RMB
US$
RMB
Sales in China
 78,369
 11,411
90.2%
 58,614
79.4%
Sales in other countries
8,503
1,238
9.8%
15,243
20.6%
 86,872
12,649
100.0%
 73,857
100.0%

 
Our gross profit was RMB17.1 million (US$2.5 million) for the third quarter ended September 30, 2018, representing a gross margin rate of 19.6%, as compared to a gross margin rate of 9.1% for the same period in 2017. Correspondingly, gross margin rate increased by 10.5 percentage point compared to the same period in 2017 mainly due to the increase of average sales price.
Operating expenses for the third quarter ended September 30, 2018 were RMB17.8 million (US$2.6 million), which was RMB1.5 million, or 9.2% higher than the same period in 2017. 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, 2018 was RMB1.8 million (US$0.3 million) compared to net loss attributable to the Company of RMB12.1 million during the same period in 2017, representing a decrease in loss of RMB10.3 million.
Basic and diluted net loss per share was RMB0.57 (US$0.08) and RMB3.70 for the three-month period ended September 30, 2018 and 2017, respectively.
Total shareholders’ equity was RMB200.26 million or US$29.16 million as of September 30, 2018, compared with RMB221.03 million as of December 31, 2017.
As of September 30, 2018, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.
Nine Months 2018 Results
Net sales during the nine-month period ended September 30, 2018 were RMB243.4 million (US$35.4 million), compared to RMB211.9 million, during the same period in 2017, representing an increase of RMB31.5 million or 14.9%. The increase of average sales price caused an increase of RMB35.6 million and the decrease in the sales volume caused a decrease of RMB4.1 million.
In the nine-month period ended September 30, 2018, sales of specialty films were RMB109.0 million (US$15.9 million) or 44.8% of our total revenues as compared to RMB75.8 million or 35.8% in the same period of 2017, which was an increase of RMB33.2 million, or 43.8% as compared to the same period in 2017. The increase of average sales price caused an increase of RMB2.8 million and the increase in the sales volume caused an increase of RMB30.4 million.
The following is a breakdown of commodity and specialty film sales (amounts in thousands):
 
  

Nine-Month Period Ended
September 30, 2018
% of
Total
Nine-Month Period Ended
September 30, 2017
% of Total
RMB
US$
RMB
Stamping and transfer film
90,930
13,239
37.3%
83,038
39.2%
Printing film
23,874
3,476
9.8%
18,627
8.8%
Metallization film
2,568
374
1.1%
6,976
3.3%
Specialty film
109,020
15,874
44.8%
75,817
35.8%
Base film for other applications
17,006
2,476
7.0%
27,409
12.9%
243,398
35,439
100.0%
211,867
100.0%

 
Overseas sales during the nine months ended September 30, 2018 were RMB36.1 million or US$5.3 million, or 14.8% of total revenues, compared with RMB44.2 million or 20.9% of total revenues in the same period in 2017. This was RMB8.1 million lower than the same period in 2017. The decrease in sales volume resulted in a decrease of RMB12.7 million and the increase of average sales price caused an increase of RMB4.6 million.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):
 

 
Nine-Month Period Ended
September 30, 2018
% of Total
Nine-Month Period Ended
September 30, 2017
% of Total
RMB
US$
RMB
Sales in China
 207,291
     30,181
85.2%
 167,622
79.1%
Sales in other countries
36,107
       5,258
14.8%
44,245
20.9%
   243,398
    35,439
100.0%
   211,867
100.0%

 
Our gross profit was RMB33.3 million (US$4.9 million) for the first nine months ended September 30, 2018, representing a gross margin of 13.7%, as compared to a gross margin of 7.3% for the same period in 2017. Correspondingly, gross margin increased by 6.4 percentage. Our average product sales prices increased by 17.2% compared to the same period last year while the average cost of goods sold increased by 9.1% 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, 2018 compared with the same period in 2017, which resulted in an increase in our gross profit.
Operating expenses for the nine months ended September 30, 2018 were RMB47.0 million (US$6.8 million), compared to RMB44.3 million in the same period in 2017, which was RMB2.7 million or 6.1% higher than the same period in 2017. This increase is mainly due to increased expenses on research and development.
Conference Call Information
The Company will host a teleconference on Wednesday, November 28, 2018, at 8:00 a.m. ET / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-877-407-9205 in North America, or +1-201-689-8054 internationally prior to the scheduled start time.
A replay of the call can 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: 41237. The replay will be available until December 28, 2018, at 08:00 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 (biaxially oriented polyethylene terephthalate). Fuwei's BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as used 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
 
Financial Tables to Follow
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017
(amounts in thousands except share and per share value)
(Unaudited)
 

September 30, 2018
December 31, 2017
RMB
US$
RMB
ASSETS
Current assets
Cash and cash equivalents
24,635
3,587
12,963
Restricted cash
60,990
8,880
56,501
Accounts and bills receivable, net
15,574
2,268
20,123
Inventories
25,594
3,727
24,578
Advance to suppliers
8,885
1,294
3,898
Prepayments and other receivables
1,780
259
1,404
Deferred tax assets – current
1,268
185
1,288
Total current assets
138,726
20,200
120,755
Property, plant and equipment, net
342,600
49,884
371,058
Construction in progress
366
53
366
Lease prepayments, net
16,429
2,392
16,830
Advance to suppliers - long term, net
1,542
225
1,570
Deferred tax assets - non current
6,796
990
6,901
Total assets
506,459
73,744
517,480
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings
64,950
9,457
50,000
Due to related parties
113,602
16,541
151,074
Accounts payables
19,907
2,899
17,470
Notes payable
90,980
13,247
67,900
Advance from customers
8,829
1,286
1,976
Accrued expenses and other payables
5,343
778
5,268
Total current liabilities
303,611
44,208
293,688
Deferred tax liabilities
2,587
377
2,763
Total liabilities
306,198
44,585
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
1,940
13,323
Additional paid-in capital
311,907
45,415
311,907
Statutory reserve
37,441
5,452
37,441
Accumulated deficit
(163,223)
(23,766)
(144,508)
Cumulative translation adjustment
813
118
2,866
Total equity
200,261
29,159
221,029
Total liabilities and equity
506,459
73,744
517,480

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

The Three-Month Period Ended September 30,
The Nine-Month Period Ended September 30, 
 
2018
2017
2018
2017
RMB
US$
RMB
RMB
US$
RMB
Net sales
86,872
12,649
73,857
243,398
35,439
211,867
Cost of sales
69,812
10,165
67,145
210,051
30,584
196,373
Gross profit
17,060
2,484
6,712
33,347
4,855
15,494
Operating expenses
Selling expenses
2,960
431
3,410
9,325
1,358
10,617
Administrative expenses
14,874
2,166
12,917
37,667
5,484
33,669
Total operating expenses
17,834
2,597
16,327
46,992
6,842
44,286
Operating loss 
(774)
(113)
(9,615)
(13,645)
(1,987)
(28,792)
Other income (expense)
- Interest income
356
52
103
739
108
607
- Interest expense
(2,769)
(403)
(2,244)
(7,227)
(1,052)
(7,097)
- Others income (expense), net
1,324
193
(374)
1,369
199
(763)
Total other expense
(1,089)
(158)
(2,515)
(5,119)
(745)
(7,253)
Loss before provision for income taxes
(1,863)
(271)
(12,130)
(18,764)
(2,732)
(36,045)
Income tax benefit
15
2
54
49
7
168
Net loss 
(1,848)
(269)
(12,076)
(18,715)
(2,725)
(35,877)
Other comprehensive loss
- Foreign currency translation adjustments
24
3
1,206
(2,053)
(299)
993
Comprehensive loss
(1,824)
(266)
(10,870)
(20,768)
(3,024)
(34,884)
Loss per share,
Basic and diluted
(0.57)
(0.08)
(3.70)
(5.73)
(0.83)
(10.99)
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, 2018 AND 2017
(amounts in thousands except share and per share value)
(Unaudited)
 

The Nine-Month Period Ended September 30, 
2018
2017
RMB
US$
RMB
Cash flow from operating activities
Net loss
(18,715)
(2,725)
(35,877)
Adjustments to reconcile net loss to net cash used in operating activities
- Depreciation of property, plant and equipment
33,271
4,844
32,334
- Amortization of intangible assets
400
58
394
- Deferred income taxes
(51)
(7)
(168)
- Bad debt (recovery) expense
(132)
(19)
714
-Inventory provision
-
-
(57)
Changes in operating assets and liabilities 
- Accounts and bills receivable
4,682
682
5,589
- Inventories
(1,016)
(148)
3,790
- Advance to suppliers
(4,987)
(726)
(5,591)
- Prepaid expenses and other current assets
(551)
(80)
100
- Accounts payable
2,436
355
(1,037)
- Accrued expenses and other payables
(1,031)
(150)
354
- Advance from customers
6,852
998
2,021
- Tax payable
1,270
185
4,693
Net cash provided by (used in) operating activities
22,428
3,267
7,259
Cash flow from investing activities
Purchases of property, plant and equipment
(4,812)
(701)
(4,024)
Restricted cash related to trade finance
(4,489)
(654)
871
Advance to suppliers - non current
28
4
161
Amount change in construction in progress
-
-
65
Net cash used in investing activities
(9,273)
(1,351)
(2,927)
Cash flow from financing activities
Principal payments of bank loans
 -
 -
 (1,675)
Proceeds from short-term bank loans
14,950
2,177
5,000
Proceeds from related party
(37,472)
(5,456)
2,666
Change in notes payable
23,080
3,361
(888)
Net cash provided by financing activities
558
82
5,103
Effect of foreign exchange rate changes
(2,041)
(403)
942
Net increase in cash and cash equivalent
11,672
1,595
10,377
Cash and cash equivalent
At beginning of period/year
12,963
1,992
13,343
At end of period/year
24,635
3,587
23,720
SUPPLEMENTARY DISCLOSURE:
Interest paid
7,227
1,052
7,097
Income tax paid
-
-
-
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:
Account payable for plant and equipment:
1,029
150
2,040