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Fuwei Films Announces Second Quarter and First Half 2019 Unaudited Financial Results
Time:2019/8/23 15:45:04  Source:
Fuwei Films Announces Second Quarter and First Half 2019 Unaudited Financial Results -Teleconference to be held on Friday, August 23, 2019 at 9:00 am EDT- BEIJING, August 22, 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 unaudited financial results for the three-month and six-month periods ended June 30, 2019. Second Quarter 2019 Financial Highlights  Net sales were RMB88.1 million (US$12.8 million), 10.7% higher compared to RMB79.6 million during the same period in 2018.  Sales of specialty films were RMB42.0 million (US$6.1 million) or 47.6% of our total revenues, 36.8% higher compared to RMB30.7 million in the same period of 2018.  Overseas sales were RMB14.3 million (US$2.1 million), or 16.3% of total revenues.  Our gross profit was RMB18.6 million (US$2.7 million), 173.5% higher compared to RMB6.8 million during the same period in 2018.  Gross margin was 21.1%, compared to 8.5% during the same period in 2018.  Net profit attributable to the company was RMB1.0 million, compared to net loss of RMB8.7 million during the same period in 2018. First Six Months 2019 Financial Highlights  Net sales were RMB169.2 million (US$24.6 million), 8.1% higher compared to RMB156.5 million in the same period in 2018.  Sales of specialty films were RMB74.2 million (US$10.8 million) or 43.8% of our total revenues, 16.5% higher compared to RMB63.7 million or 40.7% in the same period of 2018.  Overseas sales were RMB30.6 million (US$4.5 million), or 18.1% of total revenues.  Gross profit was RMB31.0 million (US$4.5 million), 90.2% higher compared to RMB16.3 million during the same period in 2018.  Gross margin was 18.3%, higher than 10.4% for the same period in 2018. Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, “We are pleased to return to profitability after years of hard work and believe that the worst may be behind us. We believe the turnaround was a result of our commitment to differentiated product strategy and continuous R&D. Sales of specialty films continued to increase and accounted for 47.6% of total sales during the quarter compared to 38.6% last year. Meanwhile, we believe research and development is helping us launch new products and expand the end-user applications of our films. Looking ahead, the BOPET industry remains competitive as a result of higher supply. Nevertheless, we will continue to innovate, tackle overseas markets and execute differentiated product strategy to improve performance and capture opportunities.” Financial Results for the Three Months Ended June 30, 2019 Net sales during the second quarter ended June 30, 2019 were RMB88.1 million (US$12.8 million), compared to RMB79.6 million during the same period in 2018, representing an increase of RMB8.5 million or 10.7%. The increase of average sales price caused an increase of RMB7.4 million and the sales volume increase caused an increase of RMB1.1 million. In the second quarter of 2019, sales of specialty films were RMB42.0 million (US$6.1 million) or 47.6% of our total revenues as compared to RMB30.7 million or 38.6% in the same period of 2018, which was an increase of RMB11.3 million, or 36.8% as compared to the same period in 2018. The increase of average sales price caused an increase of RMB1.2 million and the increase in the sales volume caused an increase of RMB10.1 million. The increase was largely attributable to the increase in sales volume. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Three-Month Period Ended June 30, 2019 % of Total Three-Month Period Ended June 30, 2018 % of Total RMB US$ RMB Stamping and transfer film 28,596 4,165 32.4% 29,428 37.0% Printing film 8,512 1,240 9.7% 11,713 14.7% Metallization film 1,938 282 2.2% 622 0.8% Specialty film 41,958 6,112 47.6% 30,748 38.6% Base film for other application 7,113 1,037 8.1% 7,088 8.9% 88,117 12,836 100.0% 79,599 100.0% Overseas sales were RMB14.3 million or US$2.1 million, or 16.3% of total revenues, compared with RMB16.6 million or 20.9% of total revenues in the second quarter of 2018. The increase of average sales price caused an increase of RMB0.8 million and the decrease in sales volume resulted in a decrease of RMB3.1 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Three-Month Period Ended June 30, 2019 % of Total Three-Month Period Ended June 30, 2018 % of Total RMB US$ RMB Sales in China 73,777 10,747 83.7% 62,994 79.1% Sales in other countries 14,340 2,089 16.3% 16,605 20.9% 88,117 12,836 100.0% 79,599 100.0% Our gross profit was RMB18.6 million (US$2.7 million) for the second quarter ended June 30, 2019, representing a gross profit rate of 21.1%, as compared to a gross profit rate of 8.5% for the same period in 2018. Correspondingly, gross margin increased by 12.6 percentage point compared to the same period in 2018. Our average product sales prices increased by 9.1% compared to the same period last year while the average cost of goods sold decreased by 5.9% compared to the same period last year. Consequently, it resulted in an increase in our gross profit. Operating expenses for the second quarter ended June 30, 2019 were RMB15.0 million (US$2.2 million), as compared to RMB13.3 million for the same period in 2018. Net profit attributable to the Company during the second quarter ended June 30, 2019 was RMB1.0 million (US$0.1 million) while net loss attributable to the Company was RMB8.7 million during the same period in 2018. Financial Results for the Six Months Ended June 30, 2019 Net sales during the six-month period ended June 30, 2019 were RMB169.2 million (US$24.6 million), compared to RMB156.5 million in the same period in 2018, representing an increase of RMB12.7 million or 8.1%. The increase in average sales price caused an increase of RMB10.4 million and the increase in the sales volume caused an increase of RMB2.3 million. In the six-month period ended June 30, 2019, sales of specialty films were RMB74.2 million (US$10.8 million) or 43.8% of our total revenues as compared to RMB63.7 million or 40.7% in the same period of 2018, which was an increase of RMB10.5 million, or 16.5% as compared to the same period in 2018. The increase in average sales price caused an increase of RMB3.4 million and the increase in the sales volume caused an increase of RMB7.1 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Six-Month Period Ended June 30, 2019 % of Total Six-Month Period Ended June 30, 2018 % of Total RMB US$ RMB Stamping and transfer film 60,123 8,757 35.6% 60,281 38.6% Printing film 20,732 3,020 12.3% 17,581 11.2% Metallization film 2,614 381 1.5% 1,795 1.1% Specialty film 74,154 10,802 43.8% 63,695 40.7% Base film for other application 11,568 1,685 6.8% 13,174 8.4% 169,191 24,645 100.0% 156,526 100.0% Overseas sales during the six months ended June 30, 2019 were RMB30.6 million or US$4.5 million, or 18.1% of total revenues, compared with RMB27.6 million or 17.6% of total revenues in the same period in 2018. This was RMB3.0 million higher than the same period in 2018. The increase in sales volume resulted in an increase of RMB1.2 million and the increase in average sales price caused an increase of RMB1.8 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Six-Month Period Ended June 30, 2019 % of Total Six-Month Period Ended June 30, 2018 % of Total RMB US$ RMB Sales in China 138,631 20,193 81.9% 128,922 82.4% Sales in other countries 30,560 4,452 18.1% 27,604 17.6% 169,191 24,645 100.0% 156,526 100.0% Our gross profit was RMB31.0 million (US$4.5 million) for the first six months ended June 30, 2019, representing a gross margin rate of 18.3%, as compared to a gross margin rate of 10.4% for the same period in 2018. Our average product sales prices increased by 6.5% compared to the same period last year while the average cost of goods sold decreased by 2.9% compared to the same period last year. Consequently, it resulted in an increase in our gross margin. Operating expenses for the six months ended June 30, 2019 were RMB28.5 million (US$4.2 million), compared to RMB29.2 million in the same period in 2018, which was RMB0.7 million or 2.4% lower than the same period in 2018. This decrease was mainly due to decreased allowances. Net loss attributable to the Company during the first half of 2019 was RMB2.4 million (US$0.4 million) compared to net loss attributable to the Company of RMB16.9 million during the same period in 2018, representing a decrease of RMB14.5 million from the same period in 2018 due to the factors described above. Cash, cash equivalent and restricted cash totaled RMB73.4 million or US$10.7 million as of June 30, 2019. Total shareholders’ equity was RMB194.4 million or US$28.3 million. As of June 30, 2019, 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 23, 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 +1-844-369-8770 in North America, or +1-862-298-0840 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: 52444. The replay will be available until September 23, 2019, at 9:00 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. 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 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 uncertainty 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 countries; uncertainty around U.S.-China trade war and its effect on the Company’s operation, fluctuations of the RMB exchange rate, 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, 2019 AND DECEMBER 31, 2018 (amounts in thousands except share and per share value) (Unaudited) June 30, 2019 December 31, 2018 RMB US$ RMB ASSETS Current assets Cash and cash equivalents 48,429 7,054 8,908 Restricted cash 24,990 3,640 38,000 Accounts and bills receivable, net 23,751 3,460 22,627 Inventories 24,273 3,536 24,675 Advance to suppliers 4,900 714 5,694 Prepayments and other receivables 1,184 172 1,068 Deferred tax assets - current 1,168 170 1,195 Total current assets 128,695 18,746 102,167 Property, plant and equipment, net 310,850 45,280 331,168 Construction in progress 283 41 366 Lease prepayments, net 16,029 2,335 16,296 Advance to suppliers - long term, net 1,542 225 1,542 Deferred tax assets - non current 3,073 448 3,143 Total assets 460,472 67,075 454,682 LIABILITIES AND EQUITY Current liabilities Short-term borrowings 64,950 9,461 64,950 Due to related parties 116,988 17,041 114,692 Accounts payables 22,441 3,269 20,750 Notes payable 49,980 7,280 48,000 Advance from customers 4,062 592 1,859 Accrued expenses and other payables 5,179 754 5,072 Total current liabilities 263,600 38,397 255,323 Deferred tax liabilities 2,464 359 2,528 Total liabilities 266,064 38,756 257,851 Equity Shareholders’ equity Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding) 13,323 1,941 13,323 Additional paid-in capital 311,907 45,434 311,907 Statutory reserve 37,441 5,454 37,441 Accumulated deficit (169,102) (24,632) (166,680) Cumulative translation adjustment 839 122 840 Total shareholders’ equity 194,408 28,319 196,831 Total equity 194,408 28,319 196,831 Total liabilities and equity 460,472 67,075 454,682 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018 (amounts in thousands except share and per share value) (Unaudited) The Three-Month Period Ended June 30, The Six-Month Period Ended June 30, 2019 2018 2019 2018 RMB US$ RMB RMB US$ RMB Net sales 88,117 12,836 79,599 169,191 24,645 156,526 Cost of sales 69,488 10,122 72,803 138,158 20,125 140,239 Gross profit 18,629 2,714 6,796 31,033 4,520 16,287 Operating expenses Selling expenses 3,537 515 3,395 6,501 947 6,365 Administrative expenses 11,453 1,668 9,916 22,030 3,209 22,792 Total operating expenses 14,990 2,183 13,311 28,531 4,156 29,157 Operating( loss) income 3,639 531 (6,515) 2,502 364 (12,870) Other income (expense) - Interest income 202 29 10 416 61 383 - Interest expense (2,244) (327) (2,257) (4,435) (646) (4,458) - Others income (expense), net (630) (92) 282 (872) (127) 45 Total other expenses (2,672) (390) (1,965) (4,891) (712) (4,030) Income(loss) before provision for income taxes 967 141 (8,480) (2,389) (348) (16,900) Income tax benefit (expense) (16) (2) (176) (33) (5) 34 Net (loss)income 951 139 (8,656) (2,422) (353) (16,866) Net (loss) income attributable to non-controlling interests - - - - - - Net income (loss) attributable to the Company 951 139 (8,656) (2,422) (353) (16,866) Other comprehensive income (loss) - Foreign currency translation adjustments attributable to non-controlling interest - - - - - - - Foreign currency translation adjustments attributable to the Company - - (36) (1) - (2,077) Comprehensive loss attributable to non-controlling interest - - - - - - Comprehensive income(loss )attributable to the Company 951 139 (8,692) (2,423) (353) (18,943) Earnings (loss) per share, Basic and diluted 0.29 0.04 (2.65) (0.74) (0.11) (5.16) 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, 2019 AND 2018 (amounts in thousands except share and per share value) (Unaudited) The Six-Month Period Ended June 30, 2019 2018 RMB US$ RMB Cash flow from operating activities Net loss (2,422) (353) (16,866) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation of property, plant and equipment 23,892 3,480 22,127 - Amortization of intangible assets 267 39 266 - Deferred income taxes 33 5 (36) - Bad debt recovery (903) (132) (70) -Inventory provision 724 105 - Changes in operating assets and liabilities - Accounts and bills receivable (222) (32) 1,541 - Inventories (323) (47) 7,019 - Advance to suppliers 794 116 (1,356) - Prepaid expenses and other current assets (116) (17) (65) - Accounts payable 1,692 247 5,463 - Accrued expenses and other payables 319 46 (27) - Advance from customers 2,203 321 1,282 - Tax payable (212) (31) 1,216 Net cash provided by (used in) operating activities 25,726 3,747 20,494 Cash flow from investing activities Purchases of property, plant and equipment (3,574) (521) 124 Restricted cash related to trade finance - - - Advanced to suppliers - non current - - 28 Amount change in construction in progress 83 12 (2,112) Net cash provided by (used in) investing activities (3,491) (509) (1,960) Cash flow from financing activities Principal payments of bank loans - - - Proceeds from (payment to) short-term bank loans - - 15,000 Proceeds from (payment to) related party 2,296 335 (38,160) Change in notes payable 1,980 288 80 Net cash (used in) provided by financing activities 4,276 623 (23,080) Effect of foreign exchange rate changes - 10 (2,067) Net increase in cash and cash equivalent 26,511 3,871 (6,613) Cash and cash equivalent At beginning of period 46,908 6,823 69,464 At end of period 73,419 10,694 62,851 SUPPLEMENTARY DISCLOSURE: Interest paid 4,435 646 4,458 SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: Account payable for plant and equipment: 1,010 147 1,008