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Fuwei Films Announces Fourth Quarter and Full Year 2018 Financial Results
Time:2019/4/29 16:47:22  Source:

Fuwei Films Announces Fourth Quarter and Full Year 2018 Financial Results

- Teleconference to be Held on Tuesday, April 30, 2019, at 9:00 a.m. ET -

BEIJING, April 29, 2019 / -- 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, 2018.

Fuwei Films 4Q 2018 Highlights

  • Net revenues were RMB90.1 million or US$13.1 million, up 14.3% year-over-year.
  • Sales of specialty films were RMB39.8 million or US$5.8 million, up 23.2% year-over-year.
  • Gross margin was 23.7%, compared to 14.7% a year ago.
  • Basic and diluted loss per share was RMB1.1 or US$0.15, compared to loss per share of RMB3.1 a year ago.

Fuwei Films 2018 Highlights

  • Net revenues were RMB333.5 million or US$48.5 million, up 14.7% year-over-year.
  • Sales of specialty films were RMB148.8 million or US$21.6 million, up 37.7% year-over-year.
  • Net cash provided by operating activities was RMB25.4 million or US$3.7 million, compared to RMB10.8 million a year ago.
  • Gross margin was 16.4%, compared to 9.3% a year ago.
  • Basic and diluted loss per share was RMB6.79 or US$0.99, compared to loss per share of RMB14.09 a year ago.

"Oversupply in the BOPET plastic films market persisted in 2018. While this impacted the Company's results, we are pleased that our revenues and gross margins continued to grow. Sales of specialty films increased 37.7% year-over-year and accounted for 44.6% of our total revenues in 2018. We believe that our focus on innovation will enable the Company to expand end-user product applications and attract new clients and expand relationships with existing customers. We are encouraged by positive trends in revenues and gross margins which we expect to enable us to better navigate the industrial and economic landscape ahead," commented by Mr. Zengyong Wang, the CEO and Chairman of the Company.

Fourth Quarter 2018 Results

Revenues for the fourth quarter of 2018 were RMB90.1 million or US$13.1 million, compared with RMB78.8 million in the fourth quarter of 2017, an increase of RMB11.3 million, or 14.3%. Sales volume accounted for a decrease of RMB7.3 millionwhile the increase of average sales price caused an increase of RMB18.6 million.

Sales of specialty films for the fourth quarter of 2018 were RMB39.8 million or US$5.8 million, or 44.1% of total revenues, compared with RMB32.3 million or 40.9% of total revenue in the fourth quarter of 2017. The increase was mainly attributable to increase in sales volumes and average sales price compared to the prior year.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2018 and 2017 (amounts in thousands):

   

Three months period ended

   

December 31, 
2018

% of Total

December 31, 
2017

% of Total

   

RMB

US$

RMB

Stamping and transfer film

 

38,617

5,616

42.8%

33,357

42.3%

Printing film

 

6,813

991

7.6%

6,152

7.8%

Metallized film

 

1,805

263

2.0%

1,456

1.8%

Specialty film

 

39,781

5,786

44.1%

32,272

40.9%

Base film for other applications

 

3,108

452

3.4%

5,602

7.1%

             

Total

 

90,124

13,108

100%

78,839

100%

Sales in China for the fourth quarter of 2018 were RMB80.8 million, or US$11.8 million, or 89.7% of total revenues, compared with RMB67.5 million or 85.6% of total revenues in the fourth quarter of 2017. Sales volume accounted for a decrease of RMB3.4 million while the increase of average sales price caused an increase of RMB16.7 million.

Overseas sales for the fourth quarter of 2018 were RMB9.3 million or US$1.4 million, or 10.3% of total revenues, compared with RMB11.3 million or 14.4% of total revenues in the fourth quarter of 2017. Sales volume accounted for a decrease of RMB3.9 million while the increase of average sales price caused an increase of RMB1.9 million.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2018 and 2017(amounts in thousands):

   

Three-month period ended

   

December 31, 
2018

% of Total

December 31, 
2017

% of Total

   

RMB

US$

RMB

Sales in China

 

80,837

11,757

89.7%

67,522

85.6%

Sales in other countries

 

9,287

1,351

10.3%

11,317

14.4%

             

Total

 

90,124

13,108

100%

78,839

100%

Gross profit for the fourth quarter of 2018 was RMB21.3 million or US$3.1 million, representing a gross margin of 23.7%, compared with a gross profit of RMB11.6 million, representing a gross margin of 14.7% in the fourth quarter of 2017.

Operating expenses for the fourth quarter of 2018 were RMB19.0 million or US$2.8 million compared with RMB16.7 million in the fourth quarter of 2017.

Operating profit for the fourth quarter of 2018 was RMB2.4 million or US$0.3 million, compared with an operating loss of RMB5.1 million in the fourth quarter of 2017.

Net loss attributable to the Company for the fourth quarter of 2018 was RMB3.5 million or US$0.5 million, compared with net loss attributable to the Company of RMB10.1 million in the fourth quarter of 2017.

Basic and diluted loss per share was RMB1.1 or US$0.15, compared with basic and diluted loss per share of RMB3.1 in the fourth quarter of 2017.

2018 Full Year Results

During the fiscal year ended December 31, 2018, net revenues were RMB333.5 million (US$48.5 million), compared to RMB290.7 million during the same period in 2017, representing an increase of RMB42.8 million or 14.7%. The increase of average sales price caused an increase of RMB53.9 million and the reduction of sales volume factor made a decrease of RMB11.1 million.

In 2018, sales of specialty films were RMB148.8 million (US$21.6 million) or 44.6% of our total revenues as compared to RMB108.1 million or 37.2% in 2017, which was an increase of RMB40.7 million, or 37.7%, as compared to the same period in 2017. The increase of average sales price caused an increase of RMB7.1 million and the increase of sales volume factor made an increase of RMB33.6 million.

Sales in China in 2018 were RMB288.1 million, or US$41.9 million, or 86.4% of total revenues, compared with RMB235.1 million or 80.9% of total revenues in 2017. Sales volume accounted for an increase of RMB5.9 million while the increase of average sales price caused an increase of RMB47.1 million.

Overseas sales were RMB45.4 million or US$6.6 million, or 13.6% of total revenues, compared with RMB55.6 million or 19.1% of total revenues in 2017. The increase of average sales price caused an increase of RMB6.4 million and the reduction of sales volume factor made a decrease of RMB16.6 million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2018 and 2017 (amounts in thousands):

 

For the year ended December 31,

   

2018

% of Total

2017

% of Total

   

RMB

US$

RMB

Sales in China

 

288,128

41,907

86.4%

235,143

80.9%

Sales in other countries

 

45,394

6,602

13.6%

55,563

19.1%

   

333,522

48,509

100.0%

290,706

100.0%

Our gross margin was 16.4% for the year of 2018, as compared to a gross margin of 9.3% in 2017.

Our average unit sales price increased by 19.3% compared to last year. The unit sales cost increased by 10.0% 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 2018 compared with 2017, which contributed to the increase in our gross profit.

Our operating expenses during the year ended December 31, 2018 were RMB66.0 million, an increase of RMB5.0 million, or 8.2%, as compared to 2017.

Net loss attributable to the Company for full year 2018 was RMB22.2 million or US$3.2 million, compared with a net loss of RMB46.0 million in 2017.

Basic and diluted loss per share for the year ended December 31, 2018 was RMB6.79 or US$0.99.

Net cash provided by operating activities was RMB25.4 million for the year ended December 31, 2018 as compared to net cash provided by operating activities of RMB10.8 million for the year ended December 31, 2017.

Cash and cash equivalents on December 31, 2018 was RMB8.9 million or US$1.3 million, compared with RMB13.0 millionas of December 31, 2017.

Conference Call Information

The Company will host a teleconference on Tuesday, April 30, 2019, at 9:00 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: 45517. The replay will be available until May 30, 2019, at 09:00 a.m. ET.

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.:

Shiwei Yin 
Investor Relations
Grayling
Phone: +1-646-284-9474
Email: shiwei.yin@grayling.com 

Financial Tables Follow

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

As of December 31, 2018 and 2017

(amounts in thousands, except share and per share data)

 
   

December 31, 2018

 

December 31, 2017

 

RMB

US$

 

RMB

ASSETS

Current assets

         

Cash and cash equivalents

 

8,908

1,296

 

12,963

Restricted cash

 

38,000

5,527

 

56,501

Accounts and bills receivable, net

 

22,627

3,291

 

20,123

Inventories

 

24,675

3,589

 

24,578

Advance to suppliers

 

5,694

828

 

3,898

Prepayments and other receivables

 

1,068

155

 

1,404

Deferred tax assets – current

 

1,195

174

 

1,288

Total current assets

 

102,167

14,860

 

120,755

           

Property, plant and equipment, net

 

331,168

48,166

 

371,058

Construction in progress

 

366

53

 

366

Lease prepayments, net

 

16,296

2,370

 

16,830

Advance to suppliers - long term, net

 

1,542

224

 

1,570

Deferred tax assets - non current

 

3,143

457

 

6,901

           

Total assets

 

454,682

66,130

 

517,480

           

LIABILITIES AND EQUITY

Current liabilities

         

Short-term borrowings

 

64,950

9,447

 

50,000

Due to related parties

 

114,692

16,681

 

151,074

Accounts payables

 

20,750

3,018

 

17,470

Notes payable

 

48,000

6,981

 

67,900

Advance from customers

 

1,859

270

 

1,976

Accrued expenses and other payables

 

5,072

738

 

5,268

Total current liabilities

 

255,323

37,135

 

293,688

Deferred tax liabilities

 

2,528

368

 

2,763

           

Total liabilities

 

257,851

37,503

 

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

1,938

 

13,323

Additional paid-in capital

 

311,907

45,365

 

311,907

Statutory reserve

 

37,441

5,446

 

37,441

Retained earnings

 

(166,680)

(24,243)

 

(144,508)

Cumulative translation adjustment

 

840

121

 

2,866

Total shareholders' equity

 

196,831

28,627

 

221,029

           

Total equity

 

196,831

28,627

 

221,029

Total liabilities and equity

 

454,682

66,130

 

517,480

             

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2018, 2017 and 2016

(amounts in thousands, except share and per share data)

 
   

The Year Ended December 31, 

   

2018

2017

2016

 

RMB

US$

RMB

RMB

Net sales

 

333,522

48,509

290,706

253,926

Cost of sales

 

278,834

40,555

263,606

236,190

           

Gross margin

 

54,688

7,954

27,100

17,736

           

Operating expenses:

         

Selling expenses

 

13,363

1,944

14,520

13,764

Administrative expenses

 

52,593

7,649

46,514

46,211

Loss on impairment of assets

 

-

-

-

-

Total operating expenses

 

65,956

9,593

61,034

59,975

           

Operating loss

 

(11,268)

(1,639)

(33,934)

(42,239)

           

Other income (expense):

         

- Interest income

 

1,225

178

725

735

- Interest expense

 

(9,766)

(1,420)

(9,453)

(7,865)

- Others income (expense), net

 

1,255

183

(2,533)

203

Total other income (expense)

 

(7,286)

(1,059)

(11,261)

(6,927)

           

Loss before provision for income taxes

 

(18,554)

(2,698)

(45,195)

(49,166)

           

Income tax (expense) benefit 

 

(3,618)

(526)

(808)

(5,317)

           

Net loss 

 

(22,172)

(3,224)

(46,003)

(54,483)

           

Net income (loss) attributable to noncontrolling interests

 

-

-

-

-

Net loss attributable to the Company

 

(22,172)

(3,224)

(46,003)

(54,483)

           

Other comprehensive income (loss):

         

- Foreign currency translation adjustments attributable to noncontrolling interest

 

-

-

-

-

- Foreign currency translation adjustments attributable to the Company

 

(2,026)

(295)

1,821

(4)

           

Comprehensive income (loss) attributable to non-controlling interest

 

-

-

-

-

Comprehensive loss attribute to the Company

 

(24,198)

(3,519)

(44,182)

(54,487)

           

Net loss per share, 
Basic and diluted

 

(6.79)

(0.99)

(14.09)

(16.68)

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, 2018, 2017 and 2016

(Amounts in thousands)

 
   

The Years Ended December 31, 

   

2018

 

2017

2016

   

RMB

US$

 

RMB

RMB

Cash flow from operating activities

           

Net loss

 

(22,172)

(3,224)

 

(46,003)

(54,483)

Adjustments to reconcile net loss to net cash

           

provided by (used in) operating activities

           
             

- Loss on Long-term assets impairment

 

-

-

 

-

-

- Depreciation of property, plant and equipment

 

44,509

6,474

 

42,877

43,193

- Amortization of intangible assets

 

534

78

 

528

524

- Deferred income taxes (benefit)

 

3,617

526

 

808

5,317

- Bad debt (recovery) expense

 

(620)

(90)

 

(746)

2,466

- Inventory provision

 

-

-

 

1,340

(226)

Changes in operating assets and liabilities 

           

- Investment income recorded on Fuwei Holdings' book

 

-

-

 

-

(1,722)

- Accounts and bills receivable

 

(1,884)

(274)

 

10,075

(21,873)

- Inventories

 

(96)

(14)

 

(766)

4,647

- Advance to suppliers

 

(1,796)

(261)

 

2,145

(403)

- Prepaid expenses and other current assets

 

161

23

 

75

18

- Accounts payable

 

3,278

477

 

(3,110)

(12,179)

- Accrued expenses and other payables

 

(850)

(124)

 

128

(3,597)

- Advance from customers

 

(117)

(17)

 

(1,533)

1,263

- Tax payable

 

817

119

 

5,009

13,827

             

Net cash provided by (used in) operating activities

 

25,381

3,693

 

10,827

(23,228)

             

Cash flow from investing activities

           

Purchases of property, plant and equipment

 

(4,619)

(672)

 

(3,282)

(11,218)

Advanced to suppliers - non current

 

28

4

 

291

(421)

Amount change in construction in progress

 

-

-

 

65

1,269

             

Deposit for purchase

 

-

-

 

-

-

             

Net cash used in (provided by) investing activities

 

(4,591)

(668)

 

(2,926)

(10,370)

             

Cash flow from financing activities

           

Principal payments of bank loans

 

-

-

 

(3,300)

(3,350)

Proceeds from short-term bank loans

 

14,950

2,174

 

(10,000)

60,000

Proceeds from related party

 

(36,382)

(5,292)

 

19,327

(11,333)

Payment of capital lease obligation

 

-

-

 

-

(302)

Change in notes payable

 

(19,900)

(2,894)

 

(32,988)

15,108

             
             

Net cash provided by (used in) financing activities

 

(41,332)

(6,012)

 

(26,961)

60,123

             

Effect of foreign exchange rate changes

 

(2,014)

(866)

 

1,760

2,669

             

Net decrease in cash and cash equivalent, restricted cash

 

(22,556)

(3,853)

 

(17,300)

29,194

             

Cash and cash equivalent,and  restricted cash

           

At beginning of period/year

 

69,464

10,676

 

86,764

57,570

At end of period/year

 

46,908

6,823

 

69,464

86,764

             

SUPPLEMENTARY DISCLOSURE:

           

Interest paid

 

9,766

1,420

 

9,453

7,865

Income tax paid

 

-

-

 

-

-

             

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND
FINANCIAL ACTIVITIES:

           

Account payable for plant and equipment:

 

1,010

147

 

1,374

1,597

Obligations for acquired equipment under capital lease:

 

-

-

 

-

-