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Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2020
Time:2020/11/24 11:40:25  Source:
Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2020 -Teleconference to be held on November 24, 2020 at 8:00 am ET- BEIJING, November 23, 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 unaudited financial results for the third quarter of 2020 ended September 30, 2020. Third Quarter 2020 Financial Highlights  Net sales were RMB84.3 million (US$12.4 million), compared to RMB79.6 million during the same period in 2019.  Sales of specialty films were RMB54.4 million (US$8.0 million) or 64.6% of total revenues as compared to RMB40.6 million or 51.0% in the same period of 2019.  Overseas sales were RMB7.8 million or US$1.1 million, or 9.2% of total revenues, compared with RMB11.6 million or 14.6% of total revenues in the third quarter of 2019.  Gross profit was RMB36.0 million (US$5.3 million), representing a gross margin rate of 42.7%, as compared to gross profit of RMB21.6 million and a gross margin rate of 27.1% for the same period in 2019.  Net profit attributable to the Company was RMB13.5million (US$2.0 million) compared to net profit attributable to the Company of RMB3.4 million during the same period in 2019, representing an increase in profit of RMB10.1 million. First Nine Months of 2020 Financial Highlights  Net sales were RMB250.4 million (US$36.9 million), compared to RMB248.8 million during the same period in 2019.  Sales of specialty films were RMB142.4 million (US$21.0 million) or 56.9% of total revenues as compared to RMB114.7 million or 46.1% in the same period of 2019.  Overseas sales were RMB21.1 million (US$3.1 million), or 8.4% of total revenues, compared with RMB42.2 million or 16.9% of total revenues in the same period in 2019.  Gross profit was RMB100.2 million (US$14.8 million), representing a gross margin of 40.0%, compared with gross profit of RMB52.6 million or a gross margin of 21.2% in the same period of 2019.  Net profit attributable to the Company was RMB40.5 million (US$6.0 million) compared to net profit attributable to the Company of RMB1.0 million during the same period in 2019, representing an increase of RMB39.5 million from the same period in 2019. Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, “Despite the challenging industry environment and the outbreak of the COVID-19 pandemic which has caused significant and adverse effects on the global economy, our orders remain solid and sales are relatively stable. Sales of specialty films increased continuously which accounted for 64.6% of our total revenues during the quarter. In addition, we maintained profitability for six consecutive quarters. We believe these results benefit from our commitment to innovation and differentiated marketing strategy which have expanded the end-user applications of our films products. We will continue with these efforts and expect that they will enable the Company to capitalize on new opportunities despite challenging industry and economic conditions.” Third Quarter 2020 Results Net sales during the third quarter ended September 30, 2020 were RMB84.3 million (US$12.4 million), compared to RMB79.6 million during the same period in 2019, representing a year-over-year increase of RMB4.7 million or 5.9%. The decrease of average sales price caused a decrease of RMB3.2 million and the sales volume increase caused an increase of RMB7.9 million. In the third quarter of 2020, sales of specialty films were RMB54.4 million (US$8.0 million) or 64.6% of total revenues as compared to RMB40.6 million or 51.0% in the same period of 2019, representing a year-over-year increase of RMB13.8 million, or 34.0% as compared to the same period in 2019. The decrease in average sales price caused a decrease of RMB2.0 million and the increase in the sales volume caused an increase of RMB15.8 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Three-Month Period Ended September 30, 2020 % of Total Three-Month Period Ended September 30, 2019 % of Total RMB US$ RMB Stamping and transfer film 19,860 2,926 23.6% 26,552 33.3% Printing film 6,261 922 7.4% 7,881 9.9% Metallization film 451 66 0.5% 1,197 1.5% Specialty film 54,435 8,017 64.6% 40,559 51.0% Base film for other application 3,309 487 3.9% 3,397 4.3% 84,316 12,418 100.0% 79,586 100.0% Overseas sales were RMB7.8 million or US$1.1 million, or 9.2% of total revenues, compared with RMB11.6 million or 14.6% of total revenues in the third quarter of 2019. The decrease in average sales price caused a decrease of RMB0.6 million and the decrease in sales volume resulted in a decrease of RMB3.2 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Three-Month Period Ended September 30, 2020 % of Total Three-Month Period Ended September 30, 2019 % of Total RMB US$ RMB Sales in China 76,518 11,270 90.8% 67,993 85.4% Sales in other countries 7,798 1,148 9.2% 11,593 14.6% 84,316 12,418 100.0% 79,586 100.0% Gross profit was RMB36.0 million (US$5.3 million) for the third quarter ended September 30, 2020, representing a gross margin rate of 42.7%, as compared to gross profit of RMB21.6 million and a gross margin rate of 27.1% for the same period in 2019. Correspondingly, gross margin rate increased by 15.6 percentage point compared to the same period in 2019. Operating expenses for the third quarter ended September 30, 2020 were RMB20.9 million (US$3.1 million), which was RMB4.6 million, or 28.2% higher than the same period in 2019. This increase was mainly due to the change of accounting estimate which caused the increase of accrual depreciation of the third production line. Net profit attributable to the Company during the third quarter ended September 30, 2020 was RMB13.5 million (US$2.0 million) compared to net profit attributable to the Company of RMB3.4 million during the same period in 2019, representing an increase in profit of RMB10.1 million. Financial Results for the Nine Months Ended September 30, 2020 Net sales during the nine-month period ended September 30, 2020 were RMB250.4 million (US$36.9 million), compared to RMB248.8 million, during the same period in 2019, representing an increase of RMB1.6 million or 0.6%, mainly due to the increase in sales volume. In the nine-month period ended September 30, 2020, sales of specialty films were RMB142.4 million (US$21.0 million) or 56.9% of total revenues as compared to RMB114.7 million or 46.1% in the same period of 2019, which was an increase of RMB27.7 million, or 24.1% as compared to the same period in 2019. The decrease of average sales price caused a decrease of RMB6.0 million and the increase in the sales volume caused an increase of RMB33.7 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Nine-Month Period Ended September 30, 2020 % of Total Nine-Month Period Ended September 30, 2019 % of Total RMB US$ RMB Stamping and transfer film 80,267 11,823 32.1% 86,675 34.9% Printing film 17,851 2,629 7.1% 28,613 11.5% Metallization film 3,112 458 1.2% 3,811 1.5% Specialty film 142,400 20,973 56.9% 114,713 46.1% Base film for other applications 6,775 998 2.7% 14,965 6.0% 250,405 36,881 100.0% 248,777 100.0% Overseas sales during the nine months ended September 30, 2020 were RMB21.1 million (US$3.1 million), or 8.4% of total revenues, compared with RMB42.2 million or 16.9% of total revenues in the same period in 2019. This was RMB21.1 million lower than the same period in 2019. The decrease in sales volume resulted in a decrease of RMB21.6 million and the increase of average sales price caused an increase of RMB0.5 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Nine-Month Period Ended September 30, 2020 % of Total Nine-Month Period Ended September 30, 2019 % of Total RMB US$ RMB Sales in China 229,301 33,772 91.6% 206,625 83.1% Sales in other countries 21,104 3,109 8.4% 42,152 16.9% 250,405 36,881 100.0% 248,777 100.0% Gross profit was RMB100.2 million (US$14.8 million) for the first nine months ended September 30, 2020, representing a gross margin of 40.0%, as compared to a gross margin of 21.2% for the same period in 2019. Correspondingly, gross margin increased by 18.8 percentage. Average product sales prices decreased by 0.9% compared to the same period last year while the average cost of goods sold decreased by 24.7% compared to the same period last year. Operating expenses for the nine months ended September 30, 2020 were RMB54.7 million (US$8.1 million), compared to RMB44.9 million in the same period in 2019, which was RMB9.8 million or 21.8% higher than the same period in 2019. This increase was mainly due to the change of accounting estimate which caused the increase of accrual depreciation of the third production line. Net profit attributable to the Company during the first nine-month period of 2020 was RMB40.5 million (US$6.0 million) compared to net profit attributable to the Company of RMB1.0 million during the same period in 2019, representing an increase of RMB39.5 million from the same period in 2019 due to the factors described above. Cash, cash equivalent and restricted cash totaled RMB88.8 million (US$13.1 million) as of September 30, 2020. Total shareholders’ equity was RMB248.7 million (US$36.6 million). As of September 30, 2020, the Company had 3,265,837 basic and diluted total ordinary shares outstanding. Conference Call Information The Company will host a teleconference on Tuesday, November 24, 2020, at 8:00 a.m. ET / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-844-369-8770 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: 38820. The replay will be available until December 8, 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 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 coronavirus (COVID-19) outbreak and the effects of government and other measures seeking to contain its spread, 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.: 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, 2020 AND DECEMBER 31, 2019 (amounts in thousands except share and per share value) (Unaudited) September 30, 2020 December 31, 2019 RMB US$ RMB ASSETS Current assets Cash and cash equivalents 86,310 12,712 60,871 Restricted cash 2,500 368 25,500 Accounts and bills receivable, net 23,403 3,447 26,960 Inventories 27,294 4,020 23,584 Advance to suppliers 7,981 1,175 6,277 Prepayments and other receivables 1,254 185 1,058 Deferred tax assets – current 1,286 189 1,266 Total current assets 150,028 22,096 145,516 Property, plant and equipment, net 278,210 40,976 302,642 Construction in progress 1,069 157 - Lease prepayments, net 15,351 2,261 15,762 Advance to suppliers - long term, net 1,542 227 1,542 Deferred tax assets - non current 403 59 509 Total assets 446,603 65,776 465,971 LIABILITIES AND EQUITY Current liabilities Short-term borrowings 65,000 9,573 65,000 Due to related parties 92,846 13,675 119,297 Accounts payables 23,026 3,391 19,532 Notes payable 3,400 501 41,000 Advance from customers 5,127 755 5,204 Accrued expenses and other payables 6,491 956 5,454 Total current liabilities 195,890 28,851 255,487 Deferred tax liabilities 2,024 298 2,290 Total liabilities 197,914 29,149 257,777 Equity Shareholders’ equity Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding) 13,323 1,962 13,323 Additional paid-in capital 311,907 45,939 311,907 Statutory reserve 37,441 5,514 37,441 Accumulated deficit (114,822) (16,911) (155,317) Cumulative translation adjustment 840 123 840 Total equity 248,689 36,627 208,194 Total liabilities and equity 446,603 65,776 465,971 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 (amounts in thousands except share and per share value) (Unaudited) The Three-Month Period Ended September 30, The Nine-Month Period Ended September 30, 2020 2019 2020 2019 RMB US$ RMB RMB US$ RMB Net sales 84,316 12,418 79,586 250,405 36,881 248,777 Cost of sales 48,276 7,110 57,996 150,171 22,118 196,154 Gross profit 36,040 5,308 21,590 100,234 14,763 52,623 Operating expenses Selling expenses 4,200 619 3,236 11,658 1,717 9,737 Administrative expenses 16,735 2,465 13,083 43,058 6,342 35,113 Total operating expenses 20,935 3,084 16,319 54,716 8,059 44,850 Operating income 15,105 2,224 5,271 45,518 6,704 7,773 Other income (expense) - Interest income 637 94 255 1,494 220 671 - Interest expense (2,240) (330) (2,240) (6,697) (986) (6,675) - Others income (expense), net (118) (17) 80 - - (792) Total other expense (1,721) (253) (1,905) (5,203) (766) (6,796) Income before provision for income taxes 13,384 1,971 3,366 40,315 5,938 977 Income tax benefit 99 15 77 180 27 44 Net income 13,483 1,986 3,443 40,495 5,965 1,021 Other comprehensive loss - Foreign currency translation adjustments - - 1 - - - Comprehensive income 13,483 1,986 3,444 40,495 5,965 1,021 Income per share, Basic and diluted 4.13 0.61 1.05 12.40 1.83 0.31 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, 2020 AND 2019 (amounts in thousands except share and per share value) (Unaudited) The Nine-Month Period Ended September 30, 2020 2019 RMB US$ RMB Cash flow from operating activities Net income 40,495 5,965 1,021 Adjustments to reconcile net loss to net cash used in operating activities - Depreciation of property, plant and equipment 29,086 4,284 33,957 - Amortization of intangible assets 401 59 400 - Deferred income taxes (180) (27) (44) - Bad debt (recovery) expense 131 19 (897) -Inventory provision - - 724 Changes in operating assets and liabilities - Accounts and bills receivable 3426 505 (72) - Inventories (3,710) (546) 1,815 - Advance to suppliers (1,705) (251) (4,833) - Prepaid expenses and other current assets (186) (27) (155) - Accounts payable 3,494 515 393 - Accrued expenses and other payables 313 46 501 - Advance from customers (77) (11) 2,447 - Tax payable 724 107 368 Net cash provided by (used in) operating activities 72,212 10,638 35,625 Cash flow from investing activities Purchases of property, plant and equipment (4,653) (685) (12,889) Restricted cash related to trade finance - - - Advance to suppliers - non current - - - Amount change in construction in progress (1,069) (157) 366 Net cash used in investing activities (5,722) (842) (12,523) Cash flow from financing activities Principal payments of bank loans - - - Proceeds from short-term bank loans - - 50 Proceeds from related party (26,451) (3,896) 3,457 Change in notes payable (37,600) (5,538) 1,400 Net cash provided by financing activities (64,051) (9,434) 4,907 Effect of foreign exchange rate changes - 311 - Net increase in cash and cash equivalent 2,439 673 28,009 Cash and cash equivalent At beginning of period/year 86,371 12,407 46,908 At end of period/year 88,810 13,080 74,917 SUPPLEMENTARY DISCLOSURE: Interest paid 6,697 986 6,675 Income tax paid - - - SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: Account payable for plant and equipment: 1,010 149 1,062