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Fuwei Films Announces Fourth Quarter and Full Year 2019 Financial Results
Time:2020/4/28 16:09:13  Source:

Fuwei Films Announces Fourth Quarter and Full Year 2019 Financial Results

- Teleconference to be Held on Wednesday, April 29, 2020, at 9:00 a.m. ET -

BEIJING, April 28, 2020 / -- 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, 2019.

4Q 2019 Highlights

  • Net revenues were RMB86.8 million or US$12.5 million, down 3.7% year-over-year.
  • Sales of specialty films were RMB47.7 million or US$6.9 million, up 19.8% year-over-year.
  • Gross margin was 35.7%, compared to 23.7% a year ago.
  • Basic and diluted profit per share was RMB3.17 or US$0.46, compared to loss per share of RMB1.06 a year ago.

Full Year 2019 Highlights

  • Net revenues were RMB335.6 million or US$48.2 million, up 0.6% year-over-year.
  • Sales of specialty films were RMB162.4 million or US$23.3 million, up 9.1% year-over-year. Gross margin was 24.9%, compared to 16.4% a year ago.
  • Basic and diluted profit per share was RMB3.48 or US$0.50, compared to loss per share of RMB6.79 a year ago.
  • Net cash provided by operating activities was RMB54.4 million or US$7.8 million, compared to RMB25.4 million a year ago.

"Despite persisting oversupply in the BOPET plastic films market, our revenues and gross margins continued to grow. Sales of specialty films increased by 9.1% year-over-year and accounted for 48.4% of our total revenues in 2019. Our gross margin increased by 8.5 percentage points to 24.9% for the year of 2019, as compared to 16.4% 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 Mr. Zengyong Wang, CEO and Chairman of the Company.

Fourth Quarter 2019 Results

Revenues for the fourth quarter of 2019 were RMB86.8 million or US$12.5 million, compared with RMB90.1 million in the fourth quarter of 2018, a decrease of RMB3.3 million, or 3.7%. Sales volume accounted for an increase of RMB3.2 million while the decrease of average sales price caused a decrease of RMB6.5 million.

Sales of specialty films for the fourth quarter of 2019 were RMB47.7 million or US$6.9 million, or 54.9% of total revenues, compared with RMB39.8 million or 44.1% of total revenue in the fourth quarter of 2018. Sales volume accounted for an increase of RMB10.9 million while the decrease of average sales price caused a decrease of RMB3.0 million.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2019 and 2018 (amounts in thousands):

   

Three months period ended

   

December 31, 2019

% of Total

December 31, 2018

% of Total

   

RMB

US$

RMB

Stamping and transfer film

 

30,005

4,309

34.6%

38,617

42.9%

Printing film

 

5,265

756

6.1%

6,813

7.6%

Metallized film

 

1,682

242

1.9%

1,805

2.0%

Specialty film

 

47,720

6,855

54.9%

39,781

44.1%

Base film for other applications

 

2,171

312

2.5%

3,108

3.4%

             

Total

 

86,843

12,474

100%

90,124

100%

Sales in China for the fourth quarter of 2019 were RMB81.4 million, or US$11.7 million, or 93.8% of total revenues, compared with RMB80.8 million or 89.7% of total revenues in the fourth quarter of 2018. Sales volume accounted for an increase of RMB7.0 million while the decrease of average sales price caused a decrease of RMB6.4 million.

Overseas sales for the fourth quarter of 2019 were RMB5.4 million or US$0.8 million, or 6.2% of total revenues, compared with RMB9.3 million or 10.3% of total revenues in the fourth quarter of 2018.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2019 and 2018 (amounts in thousands):

   

Three-month period ended

 

   

December 31, 2019

% of Total

December 31, 2018

% of Total

   

RMB

US$

RMB

Sales in China

 

81,442

11,698

93.8%

80,837

89.7%

Sales in other countries

 

5,401

776

6.2%

9,287

10.3%

             

Total

 

86,843

12,474

100%

90,124

100%

Gross profit for the fourth quarter of 2019 was RMB31.0 million or US$4.5 million, representing a gross margin of 35.7%, compared with a gross profit of RMB21.3 million, representing a gross margin of 23.7% in the fourth quarter of 2018.

Operating expenses for the fourth quarter of 2019 were RMB15.7 million or US$2.3 million compared with RMB19.0 million in the fourth quarter of 2018.

Net profit attributable to the Company for the fourth quarter of 2019 was RMB10.3 million or US$1.5 million, compared with net loss attributable to the Company of RMB3.5 million in the fourth quarter of 2018.

Basic and diluted profit per share was RMB3.17 or US$0.46, compared with basic and diluted loss per share of RMB1.06 in the fourth quarter of 2018.

2019 Full Year Results

During the fiscal year ended December 31, 2019, net revenues were RMB335.6 million (US$48.2 million), compared to RMB333.5 million in 2018, representing an increase of RMB2.1 million or 0.6%. The decrease in average sales price caused a decrease of RMB0.8 million, which was more than offset by the increase in sales volume factor caused an increase of RMB2.9 million.

In 2019, sales of specialty films were RMB162.4 million (US$23.3 million) or 48.4% of our total revenues as compared to RMB148.8 million or 44.6% in 2018, which was an increase of RMB13.6 million, or 9.1% higher than 2018. The increase of sales volume led to an increase of RMB14.3 million, offset in part by the decline in average sales price which caused a decrease of RMB0.7 million.

Overseas sales were RMB47.6 million (US$6.8 million) or 14.2% of total revenues, compared with RMB45.4 million or 13.6% of total revenues in 2018. The increase of average sales price caused an increase of RMB0.6 million and the increase of sales volume caused an increase of RMB1.6 million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2019 and 2018 (amounts in thousands):

 

                For the year ended December 31

 
   

 

2019

% of Total

 

 

2018

% of Total

   
   

RMB

US$

 

           RMB

     

Sales in China

 

288,066

41,378

85.8%

288,128

86.4%

 

Sales in other countries

 

47,554

6,831

14.2%

45,394

13.6%

 
   

335,620

48,209

100.0%

333,522

100.0%

 
                       

Our gross profit for the year ended December 31, 2019 was RMB83.6 million (US$12.0 million), compared to RMB 54.7 million (US$8.0 million) in 2018. Our average unit sales price decreased by 0.2% compared to last year. The unit sales cost decreased by 10.4% due to the price decrease of main raw materials. Our gross margin was 24.9% for the year of 2019, as compared to a gross margin of 16.4% in 2018.

Our operating expenses during the year ended December 31, 2019 were RMB60.5 million, a decrease of RMB5.5 million, or 8.3%, as compared to 2018. The decrease was mainly due to the reduction in expense of R&D.

Net profit attributable to the Company for full year 2019 was RMB11.4 million or US$1.6 million, compared with a net loss of RMB22.2 million in 2018.

Basic and diluted earnings per share for the year ended December 31, 2019 was RMB3.48 or US$0.50.

Net cash provided by operating activities was RMB54.4 million for the year ended December 31, 2019 as compared to net cash provided by operating activities of RMB25.4 million for the year ended December 31, 2018.

Cash and cash equivalents on December 31, 2019 was RMB60.9 million or US$8.7 million, compared with RMB8.9 million as of December 31, 2018.

Conference Call 

The Company will host a teleconference on Wednesday, April 29, 2020, 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 5 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: 34138. The replay will be available until May 13, 2020.

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, uncertainty around coronavirus (COVID-19) outbreak and the effects of government and other measures seeking to contain its spread; risks related to an economic downturn or recession in the United States and in other countries around the world; and changes in political, business, and economic conditions, 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, 2019 and 2018

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

 
   

December 31, 2019

 

December 31, 2018

 

RMB

US$

 

RMB

ASSETS

Current assets

         

Cash and cash equivalents

 

60,871

8,744

 

8,908

Restricted cash

 

25,500

3,663

 

38,000

Accounts and bills receivable, net

 

26,960

3,873

 

22,627

Inventories

 

23,584

3,388

 

24,675

Advance to suppliers

 

6,277

902

 

5,694

Prepayments and other receivables

 

1,058

152

 

1,068

Deferred tax assets – current

 

1,266

182

 

1,195

Total current assets

 

145,516

20,904

 

102,167

           

Property, plant and equipment, net

 

302,642

43,472

 

331,168

Construction in progress

 

-

-

 

366

Lease prepayments, net

 

15,762

2,264

 

16,296

Advance to suppliers - long term, net

 

1,542

221

 

1,542

Deferred tax assets - non current

 

509

73

 

3,143

           

Total assets

 

465,971

66,934

 

454,682

           

LIABILITIES AND EQUITY

Current liabilities

         

Short-term borrowings

 

65,000

9,337

 

64,950

Due to related parties

 

119,297

17,136

 

114,692

Accounts payables

 

19,532

2,806

 

20,750

Notes payable

 

41,000

5,889

 

48,000

Advance from customers

 

5,204

748

 

1,859

Accrued expenses and other payables

 

5,454

783

 

5,072

Total current liabilities

 

255,487

36,699

 

255,323

Deferred tax liabilities

 

2,290

329

 

2,528

           

Total liabilities

 

257,777

37,028

 

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

1,914

 

13,323

           

Additional paid-in capital

 

311,907

44,803

 

311,907

Statutory reserve

 

37,441

5,378

 

37,441

Retained earnings

 

(155,317)

(22,310)

 

(166,680)

Cumulative translation adjustment

 

840

121

 

840

Total shareholders' equity

 

208,194

29,906

 

196,831

           

Total equity

 

208,194

29,906

 

196,831

Total liabilities and equity

 

465,971

66,934

 

454,682

             

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2019, 2018 and 2017

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

 
   

The Year Ended December 31,

     
   

2019

2018

2017

 

       RMB

        US$

       RMB

       RMB

Net sales

 

335,620

48,209

333,522

290,706

Cost of sales

 

252,010

36,199

278,834

263,606

           

Gross profit

 

83,610

12,010

54,688

27,100

           

Operating expenses:

         

Selling expenses

 

13,721

1,971

13,363

14,520

Administrative expenses

 

46,794

6,722

52,593

46,514

Loss on impairment of assets

 

-

-

-

-

Total operating expenses

 

60,515

8,693

65,956

61,034

           

Operating income (loss)

 

23,095

3,317

(11,268)

(33,934)

           

Other income (expense):

         

- Interest income

 

1,106

159

1,225

725

- Interest expense

 

(8,892)

(1,277)

(9,766)

(9,453)

- Others income (expense), net

 

(1,621)

(233)

1,255

(2,533)

Total other income (expense)

 

(9,407)

(1,351)

(7,286)

(11,261)

           

Income (loss) before provision for income taxes

 

13,688

1,966

(18,554)

(45,195)

           

Income tax (expense) benefit 

 

(2,325)

(334)

(3,618)

(808)

           

Net income (loss) 

 

11,363

1,632

(22,172)

(46,003)

           

Net  income (loss) attributable to noncontrolling interests

 

-

-

-

-

Net income (loss) attributable to the Company

 

11,363

1,632

(22,172)

(46,003)

           

Other comprehensive income (loss):

         

- Foreign currency translation adjustments attributable to
noncontrolling interest

 

-

-

-

-

- Foreign currency translation adjustments attributable to
the Company

 

-

-

(2,026)

1,821

           

Comprehensive income (loss) attributable to
non-controlling interest

 

-

-

-

-

Comprehensive income (loss) attribute to the Company

 

11,363

1,632

(24,198)

(44,182)

           

Net earnings (loss) per share,
Basic and diluted

 

3.48

0.50

(6.79)

(14.09)

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, 2019, 2018 and 2017

(Amounts in thousands)

 
   

The Years Ended December 31,

     
   

2019

 

2018

2017

   

    RMB

   US$

 

    RMB

    RMB

Cash flow from operating activities

           

Net loss

 

11,363

1,632

 

(22,172)

(46,003)

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

 

41,451

5,954

 

44,509

42,877

- Amortization of intangible assets

 

534

77

 

534

528

- Deferred income taxes (benefit)

 

2,325

334

 

3,617

808

- Bad debt (recovery) expense

 

(1,014)

(146)

 

(620)

(746)

- Inventory provision

 

1,489

214

 

-

1,340

Changes in operating assets and liabilities 

           

- Investment income recorded on Fuwei Holdings' book

 

-

-

 

-

-

- Accounts and bills receivable

 

(3,319)

(477)

 

(1,884)

10,075

- Inventories

 

(399)

(57)

 

(96)

(766)

- Advance to suppliers

 

(583)

(84)

 

(1,796)

2,145

- Prepaid expenses and other current assets

 

10

1

 

161

75

- Accounts payable

 

(1,217)

(174)

 

3,278

(3,110)

- Accrued expenses and other payables

 

(302)

(43)

 

(850)

128

- Advance from customers

 

3,344

480

 

(117)

(1,533)

- Tax payable

 

684

98

 

817

5,009

             

Net cash provided by (used in) operating activities

 

54,366

7,809

 

25,381

10,827

             

Cash flow from investing activities

           

Purchases of property, plant and equipment

 

(12,925)

(1,857)

 

(4,619)

(3,282)

Advanced to suppliers - non current

 

-

-

 

28

291

Amount change in construction in progress

 

366

53

 

-

65

             

Deposit for purchase

 

-

-

 

-

-

             

Net cash used in (provided by) investing activities

 

(12,559)

(1,804)

 

(4,591)

(2,926)

             

Cash flow from financing activities

           

Principal payments of bank loans

 

-

-

 

-

(3,300)

Proceeds from short-term bank loans

 

50

7

 

14,950

(10,000)

Proceeds from related party

 

4,606

662

 

(36,382)

19,327

Payment of capital lease obligation

 

-

-

 

-

-

Change in notes payable

 

(7,000)

(1,005)

 

(19,900)

(32,988)

             
             

Net cash provided by (used in) financing activities

 

(2,344)

(336)

 

(41,332)

(26,961)

             

Effect of foreign exchange rate changes

 

-

(85)

 

(2,014)

1,760

             

Net increase (decrease) in cash and cash equivalent, restricted cash

 

39,463

5,584

 

(22,556)

(17,300)

             

Cash and cash equivalent,and  restricted cash

           

At beginning of period/year

 

46,908

6,823

 

69,464

86,764

At end of period/year

 

86,371

12,407

 

46,908

69,464

             

SUPPLEMENTARY DISCLOSURE:

           

Interest paid

 

8,892

1,277

 

9,766

9,453

Income tax paid

 

-

-

 

-

-

             

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND
FINANCIAL ACTIVITIES:

           

Account payable for plant and equipment:

 

1,010

145

 

1,010

1,374

Obligations for acquired equipment under capital lease:

 

-

-

 

-

-

SOURCE Fuwei Films (Holdings) Co., Ltd.