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Fuwei Films Announces Its Unaudited Financial Results for the Second Quarter of 2020
Time:2020/9/4 11:45:38  Source:
Fuwei Films Announces Its Unaudited Financial Results for the Second Quarter of 2020 -Teleconference to be Held on Friday, September 4, 2020 at 9:00 am ET- Fuwei Films Announces Its Unaudited Financial Results for the Second Quarter of 2020 -Teleconference to be Held on Friday, September 4, 2020 at 9:00 am ET- BEIJING, September 3, 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 second quarter of 2020 ended June 30, 2020. Second Quarter 2020 Financial Highlights  Net sales during the second quarter ended June 30, 2020 were RMB82.9 million (US$11.7 million), compared to RMB88.1 million during the same period in 2019.  Sales of specialty films were RMB48.1 million (US$6.8 million) or 58.0% of our total revenues as compared to RMB42.0 million or 47.6% in the same period of 2019, which was an increase of RMB6.1 million, or 14.5% year-over-year.  Overseas sales were RMB7.5 million (US$1.1 million), or 9.1% of total revenues, compared with RMB14.3 million in the second quarter of 2019.  Gross profit was RMB34.4 million (US$4.9 million) for the second quarter ended June 30, 2020, representing a gross profit rate of 41.6%, as compared to a gross profit rate of 21.1% for the same period in 2019.  Net profit attributable to the Company was RMB14.1 million (US$2.0 million) while net profit attributable to the Company was RMB1.0 million during the same period in 2019. First Six Months 2020 Financial Highlights  Net sales were RMB166.1 million (US$23.5 million), compared to RMB169.2 million in the same period in 2019.  Sales of specialty films were RMB88.0 million (US$12.5 million) or 53.0% of our total revenues as compared to RMB74.2 million or 43.8% in the same period of 2019, which was an increase of RMB13.8 million, or 18.6% year-over-year.  Overseas sales were RMB13.3 million or US$1.9 million, or 8.0% of total revenues.  Gross profit was RMB64.2 million (US$9.1 million), representing a gross margin rate of 38.7%, as compared to a gross margin rate of 18.3% for the same period in 2019.  Net profit attributable to the Company was RMB27.0 million (US$3.8 million) while net loss attributable to the Company was RMB2.4 million during the same period in 2019. Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, “Despite the oversupply in the marketplace and the outbreak of COVID-19 pandemic which has caused significant and adverse effects on the global economy, we achieved positive trends in our mix of sales, especially sales of specialty films which accounted for 58% of our total revenues. In addition, we achieved net profit for five 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.” Second Quarter 2020 Results Net sales during the second quarter ended June 30, 2020 were RMB82.9 million (US$11.7 million), compared to RMB88.1 million during the same period in 2019. The decrease of average sales price caused a decrease of RMB3.6 million and lower sales volume caused a decrease of RMB1.6 million. In the second quarter of 2020, sales of specialty films were RMB48.1 million (US$6.8 million) or 58.0% of our total revenues as compared to RMB42.0 million or 47.6% in the same period of 2019, which was an increase of RMB6.1 million, or 14.5% year-over-year. The increase of sales volume caused an increase of RMB8.9 million and the decrease in the average sales price caused a decrease of RMB2.8 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Three-Month Period Ended June 30, 2020 % of Total Three-Month Period Ended June 30, 2019 % of Total RMB US$ RMB Stamping and transfer film 25,885 3,665 31.3% 28,596 32.4% Printing film 5,746 813 6.9% 8,512 9.7% Metallization film 1,159 164 1.4% 1,938 2.2% Specialty film 48,088 6,806 58.0% 41,958 47.6% Base film for other application 1,978 280 2.4% 7,113 8.1% 82,856 11,728 100.0% 88,117 100.0% Overseas sales were RMB7.5 million or US$1.1 million, or 9.1% of total revenues, compared with RMB14.3 million or 16.3% of total revenues in the second quarter of 2019. The increase of average sales price caused an increase of RMB0.5 million and the decrease in sales volume resulted in a decrease of RMB7.3 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Three-Month Period Ended June 30, 2020 % of Total Three-Month Period Ended June 30, 2019 % of Total RMB US$ RMB Sales in China 75,334 10,663 90.9% 73,777 83.7% Sales in other countries 7,522 1,065 9.1% 14,340 16.3% 82,856 11,728 100.0% 88,117 100.0% Gross profit was RMB34.4 million (US$4.9 million) for the second quarter ended June 30, 2020, representing a gross profit rate of 41.6%, as compared to a gross profit rate of 21.1% for the same period in 2019. Correspondingly, gross profit rate increased by 20.5 percentage point compared to the same period in 2019. Our average product sales prices decreased by 4.2% compared to the same period last year while the average cost of goods sold decreased by 29.0% due to the decrease in raw materials cost. Consequently, it resulted in an increase in our gross profit. Operating expenses for the second quarter ended June 30, 2020 were RMB18.7 million (US$2.7 million), as compared to RMB15.0 million for the same period in 2019. The 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 second quarter ended June 30, 2020 was RMB14.1 million (US$2.0 million) while net profit attributable to the Company was RMB1.0 million during the same period in 2019. Financial Results for the Six Months Ended June 30, 2020 Net sales during the six-month period ended June 30, 2020 were RMB166.1 million (US$23.5 million), compared to RMB169.2 million in the same period in 2019. The increase in average sales price caused an increase of RMB0.7 million and the decrease in the sales volume caused a decrease of RMB3.8 million. In the six-month period ended June 30, 2020, sales of specialty films were RMB88.0 million (US$12.5 million) or 53.0% of our total revenues as compared to RMB74.2 million or 43.8% in the same period of 2019, which was an increase of RMB13.8 million, or 18.6% year-over-year. The increase in sales volume caused an increase of RMB17.7 million and the decrease in the average sales price caused a decrease of RMB3.9 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Six-Month Period Ended June 30, 2020 % of Total Six-Month Period Ended June 30, 2019 % of Total RMB US$ RMB Stamping and transfer film 60,406 8,548 36.3% 60,123 35.6% Printing film 11,591 1,641 7.0% 20,732 12.3% Metallization film 2,661 377 1.6% 2,614 1.5% Specialty film 87,965 12,451 53.0% 74,154 43.8% Base film for other application 3,466 491 2.1% 11,568 6.8% 166,089 23,508 100.0% 169,191 100.0% Overseas sales during the six months ended June 30, 2020 were RMB13.3 million (US$1.9 million), or 8.0% of total revenues, compared with RMB30.6 million or 18.1% of total revenues in the same period in 2019. The decrease in sales volume resulted in a decrease of RMB18.2 million and was mainly due to the antidumping measures while higher average sales price caused an increase of RMB0.9 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Six-Month Period Ended June 30, 2020 % of Total Six-Month Period Ended June 30, 2019 % of Total RMB US$ RMB Sales in China 152,783 21,625 92.0% 138,631 81.9% Sales in other countries 13,306 1,883 8.0% 30,560 18.1% 166,089 23,508 100.0% 169,191 100.0% Our gross profit was RMB64.2 million (US$9.1 million) for the first six months ended June 30, 2020, representing a gross margin rate of 38.7%, as compared to a gross margin rate of 18.3% for the same period in 2019. Correspondingly, gross margin rate increased by 20.4 percentage points. Our average product sales prices increased by 0.4% compared to the same period last year while the average cost of goods sold decreased by 24.6%. Consequently, it resulted in an increase in our gross margin. Operating expenses for the six months ended June 30, 2020 were RMB33.8 million (US$4.8 million), compared to RMB28.5 million in 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 income attributable to the Company during the first half of 2020 was RMB27.0 million (US$3.8 million) compared to net loss attributable to the Company of RMB2.4 million during the same period in 2019, representing an increase of RMB29.4 million from the same period in 2019 due to the factors described above. Cash, cash equivalent and restricted cash totaled RMB81.3 million (US$11.5 million) as of June 30, 2020. Total shareholders’ equity was RMB235.2 million (US$33.3 million). As of June 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 Friday, September 4, 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: 36765. The replay will be available until September 18, 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 JUNE 30, 2020 AND DECEMBER 31, 2019 (amounts in thousands except share and per share value) (Unaudited) June 30, 2020 December 31, 2019 RMB US$ RMB ASSETS Current assets Cash and cash equivalents 76,318 10,802 60,871 Restricted cash 5,000 708 25,500 Accounts and bills receivable, net 41,829 5,921 26,960 Inventories 26,107 3,695 23,584 Advance to suppliers 8,852 1,253 6,277 Prepayments and other receivables 1,156 164 1,058 Deferred tax assets - current 1,290 183 1,266 Total current assets 160,552 22,726 145,516 Property, plant and equipment, net 285,888 40,465 302,642 Construction in progress 999 141 - Lease prepayments, net 15,485 2,192 15,762 Advance to suppliers - long term, net 1,542 218 1,542 Deferred tax assets - non current 439 62 509 Total assets 464,905 65,804 465,971 LIABILITIES AND EQUITY Current liabilities Short-term borrowings 65,000 9,200 65,000 Due to related parties - - 119,297 Accounts payables 20,711 2,931 19,532 Notes payable 10,000 1,415 41,000 Advance from customers 4,411 624 5,204 Accrued expenses and other payables 127,414 18,034 5,454 Total current liabilities 227,536 32,204 255,487 Deferred tax liabilities 2,163 306 2,290 Total liabilities 229,699 32,510 257,777 Equity Shareholders’ equity Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding) 13,323 1,886 13,323 Additional paid-in capital 311,907 44,148 311,907 Statutory reserve 37,441 5,299 37,441 Accumulated deficit (128,305) (18,160) (155,317) Cumulative translation adjustment 840 121 840 Total shareholders’ equity 235,206 33,294 208,194 Total equity 235,206 33,294 208,194 Total liabilities and equity 464,905 65,804 465,971 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019 (amounts in thousands except share and per share value) (Unaudited) The Three-Month Period Ended June 30, The Six-Month Period Ended June 30, 2020 2019 2020 2019 RMB US$ RMB RMB US$ RMB Net sales 82,856 11,728 88,117 166,089 23,508 169,191 Cost of sales 48,421 6,854 69,488 101,895 14,422 138,158 Gross profit 34,435 4,874 18,629 64,194 9,086 31,033 Operating expenses Selling expenses 3,372 477 3,537 7,458 1,056 6,501 Administrative expenses 15,368 2,175 11,453 26,323 3,726 22,030 Total operating expenses 18,740 2,652 14,990 33,781 4,782 28,531 Operating income 15,695 2,222 3,639 30,413 4,304 2,502 Other income (expense) - Interest income 567 80 202 857 121 416 - Interest expense (2,241) (317) (2,244) (4,457) (631) (4,435) - Others income (expense), net 49 7 (630) 118 17 (872) Total other expenses (1,625) (230) (2,672) (3,482) (493) (4,891) Income(loss) before provision for income taxes 14,070 1,992 967 26,931 3,811 (2,389) Income tax benefit (expense) (13) (2) (16) 81 11 (33) Net income (loss) 14,057 1,990 951 27,012 3,822 (2,422) Net income (loss) attributable to non-controlling interests - - - - - - Net income (loss) attributable to the Company 14,057 1,990 951 27,012 3,822 (2,422) Other comprehensive income (loss) - Foreign currency translation adjustments attributable to non-controlling interest - - - - - - - Foreign currency translation adjustments attributable to the Company - - - - - (1) Comprehensive loss attributable to non-controlling interest - - - - - - Comprehensive income(loss ) attributable to the Company 14,057 1,990 951 27,012 3,822 (2,423) Earnings (loss) per share, Basic and diluted 4.30 0.61 0.29 8.27 1.17 (0.74) 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, 2020 AND 2019 (amounts in thousands except share and per share value) (Unaudited) The Six-Month Period Ended June 30, 2020 2019 RMB US$ RMB Cash flow from operating activities Net income (loss) 27,012 3,822 (2,422) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation of property, plant and equipment 17,986 2,546 23,892 - Amortization of intangible assets 267 38 267 - Deferred income taxes (81) (11) 33 - Bad debt recovery 160 23 (903) -Inventory provision - - 724 Changes in operating assets and liabilities - Accounts and bills receivable (15,026) (2,127) (222) - Inventories (2,523) (357) (323) - Advance to suppliers (2,497) (353) 794 - Prepaid expenses and other current assets (87) (12) (116) - Accounts payable 1,176 168 1,692 - Accrued expenses and other payables 210 30 319 - Advance from customers (793) (112) 2,203 - Tax payable 65 9 (212) Net cash provided by (used in) operating activities 25,869 3,664 25,726 Cash flow from investing activities Purchases of property, plant and equipment (1,232) (174) (3,574) Restricted cash related to trade finance - - - Advanced to suppliers - non current - - - Amount change in construction in progress (999) (141) 83 Net cash provided by (used in) investing activities (2,231) (315) (3,491) Cash flow from financing activities Principal payments of bank loans - - - Proceeds from (payment to) short-term bank loans - - - Proceeds from (payment to) related party 2,309 327 2,296 Change in notes payable (31,000) (4,388) 1,980 Net cash (used in) provided by financing activities (28,691) (4,061) 4,276 Effect of foreign exchange rate changes - (185) - Net increase in cash and cash equivalent (5,053) (897) 26,511 Cash and cash equivalent At beginning of period 86,371 12,407 46,908 At end of period 81,318 11,510 73,419 SUPPLEMENTARY DISCLOSURE: Interest paid 4,457 631 4,435 SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: Account payable for plant and equipment: 1,010 143 1,010