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Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2022
Time:2022/6/24 9:38:01  Source:
Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2022 BEIJING, June 24, 2022 - 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 first quarter of 2022 ended March 31, 2022. First quarter highlights • Net sales were RMB103.1 million (US$16.3 million), compared to RMB101.6 million, during the same period in 2021, representing an increase of RMB1.5 million, or 1.5% year-over-year • Sales of specialty films were RMB71.9 million (US$11.3 million), equivalent to 69.8% of our total revenues as compared to RMB65.0 million or 63.9% in the same period of 2021 • Gross profit was RMB30.2 million (US$4.8 million), representing a gross margin of 29.3% • Net income attributable to the Company was RMB17.1 million (US$2.7 million) Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, “Despite the oversupply in the marketplace and the ongoing coronavirus pandemic, we achieved positive trends in overall sales, especially sales of specialty films, including a base film for dry film, which accounted for 69.8% of our total revenues. The base film is a high value-added and differentiated product, which is used to produce dry films that are applied to printed circuit boards. The sales increase of base film for dry films demonstrates that our customers well-recognize the quality of our products. We believe the order growth also helps improve the Company’s financial performance. For the future, we remain committed to innovation and differentiated marketing strategy while expanding the end-user applications of our film products. We will continue these efforts and expect them to enable the Company to capitalize on new opportunities despite challenging industry and economic conditions.” First Quarter 2022 Results Net sales during the first quarter ended March 31, 2022, were RMB103.1 million (US$16.3 million), compared to RMB101.6 million, during the same period in 2021, representing an increase of RMB1.5 million, or 1.5% on an annual base. The increase in sales volume accounted for an increase of RMB1.4 million, and a higher sales price resulted in a RMB0.1 million increase. In the first quarter of 2022, sales of specialty films were RMB71.9 million (US$11.3 million), equivalent to 69.8% of our total revenues compared to RMB65.0 million or 63.9% in the same period of 2021. The increase was mainly due to higher sales volume. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Three-Month Period Ended March 31, 2022 % of Total Three-Month Period Ended March 31, 2021 % of Total RMB US$ RMB Stamping and transfer film 22,110 3,489 21.4% 25,350 25.0% Printing film 4,477 706 4.3% 5,482 5.4% Metallization film 1,421 224 1.4% 1,643 1.6% Specialty film 71,947 11,349 69.8% 64,963 63.9% Base film for other applications 3,178 501 3.1% 4,186 4.1% 103,133 16,269 100.0% 101,624 100.0% Overseas sales were RMB10.2 million or US$1.6 million, representing 9.9% of total revenues, compared with RMB9.0 million or 8.9% of total revenues in the first quarter of 2021, an increase of RMB1.2 million or 13.3%. The growth in sales volume accounted for an increase of RMB0.3 million, while a higher sales price resulted in an increase of RMB0.9 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands except percentages): Three-Month Period Ended March 31, 2022 % of Total Three-Month Period Ended March 31, 2021 % of Total RMB US$ RMB Sales in China 92,922 14,658 90.1% 92,596 91.1% Sales in other countries 10,211 1,611 9.9% 9,028 8.9% 103,133 16,269 100.0% 101,624 100.0% Our gross profit was RMB30.2 million (US$4.8 million) for the first quarter ended March 31, 2022, representing a gross margin of 29.3%, compared to a gross profit of RMB42.5 million and gross margin of 41.8% for the same period of 2021. The increase in the average cost of goods sold during the first quarter ended March 31, 2022, explained the decrease in our gross profit during the period. For the quarter, our average product sales prices increased by 0.1%, while our average cost of goods sold rose 21.7% compared to the same period in 2021. Operating expenses for the first quarter ended March 31, 2022, were RMB13.7 million (US$2.2 million), 30.5%, or RMB3.2 million above those in the same period of 2021. This increase was mainly due to higher salaries and employees’ welfare, and expenditure on R&D. Net income attributable to the Company during the first quarter ended March 31, 2022, was RMB17.1 million (US$2.7 million), compared to net income attributable to the Company of RMB31.4 million during the same period in 2021. Basic and diluted net earnings per share was RMB5.24 (US$0.83) and RMB9.60 for the three-month period ended March 31, 2022, and 2021, respectively. Total shareholders’ equity was RMB334.1 million or US$52.7 million as of March 31, 2022, compared with RMB317.0 million as of December 31, 2021. As of March 31, 2022, the Company had 3,265,837 basic and diluted ordinary shares outstanding. About Fuwei Films Fuwei Films conducts its business through its wholly-owned subsidiary, Fuwei Films (Shandong) Co., Ltd. (“Shandong Fuwei”). Shandong Fuwei 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 for packaging 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 is 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 negative impacts of the determination of the U.S. Securities and Exchange Commission that the Public Company Accounting Oversight Board (“PCAOB”) is currently unable to inspect our auditor in relation to their audit work and the potential that our ordinary shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (“HFCAA”) in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or 2023 if proposed changes to the law are enacted, 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, potential delisting of our ordinary shares under the Holding Foreign Company Affordable Act if the US Public Company Accounting Oversight Board is unable to inspect our auditors located in China, 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 the 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.: Lucia Domville Investor Relations Grayling Phone: +1-646-824-2856 Email: lucia.domville@grayling.com Financial Tables to Follow FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2022, AND DECEMBER 31, 2021 (amounts in thousands except share and per share value) (Unaudited) March 31, 2022 December 31, 2021 RMB US$ RMB ASSETS Current assets Cash and cash equivalents 261,247 41,211 250,608 Restricted cash 19,294 3,044 28,294 Accounts and bills receivable, net 28,430 4,485 29,225 Inventories 37,462 5,909 35,456 Advance to suppliers 9,275 1,463 7,933 Prepayments and other receivables 1,243 196 1,199 Deferred tax assets - current 1,144 180 1,144 Total current assets 358,095 56,488 353,859 Plant, properties and equipment, net 104,173 16,433 106,928 Construction in progress 299 47 - Lease prepayments, net 14,551 2,295 14,685 Deferred tax assets – non-current 192 30 227 Total assets 477,310 75,293 475,699 Current liabilities Short-term borrowings 65,000 10,253 65,000 Accounts payables 27,267 4,301 22,616 Notes payable 38,588 6,087 50,126 Advance from customers 4,172 658 7,672 6,387 1,008 11,479 Total current liabilities 141,414 22,307 156,893 Deferred tax liabilities 1,772 280 1,789 Total liabilities 143,186 22,587 158,682 Equity Shareholders’ equity Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding) 13,323 2,102 13,323 Additional paid-in capital 311,907 49,202 311,907 Statutory reserve 37,441 5,906 37,441 Accumulated deficit (29,387) (4,636) (46,494) Cumulative translation adjustment 840 132 840 Total shareholders’ equity 334,124 52,706 317,017 Total equity 334,124 52,706 317,017 Total liabilities and equity 477,310 75,293 475,699 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021 (amounts in thousands except share and per share value) (Unaudited) The Three-Month Period Ended March 31, 2022 2021 RMB US$ RMB Net sales 103,133 16,269 101,624 Cost of sales 72,963 11,510 59,174 Gross Profit 30,170 4,759 42,450 Operating expenses Selling expenses 5,141 811 4,114 Administrative expenses 8,575 1,353 6,355 Total operating expenses 13,716 2,164 10,469 Operating income 16,454 2,595 31,981 Other income (expense) - Interest income 1,860 293 856 - Interest expense (1,058) (167) (1,575) - Other income (expense), net (131) (21) 122 Total other expense 671 105 (597) Income before provision for income taxes 17,125 2,700 31,384 Income tax benefit (expense) (18) (3) (19) Net income 17,107 2,697 31,365 Net loss attributable to non-controlling interests - - - Net income attributable to the Company 17,107 2,697 31,365 Other comprehensive income - Foreign currency translation adjustments attributable to non-controlling interest - - - - Foreign currency translation adjustments attributable to the Company - - - Comprehensive loss attributable to non-controlling interest - - - Comprehensive income attributable to the Company 17,107 2,697 31,365 Earnings per share, Basic and diluted 5.24 0.83 9.60 Weighted average number of ordinary shares, Basic and diluted 3,265,837 3,265,837 3,265,837 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021 (amounts in thousands except share and per share value) (Unaudited) The Three-Month Period Ended March 31, 2022 2021 RMB US$ RMB Cash flow from operating activities Net income 17,107 2,697 31,365 Adjustments to reconcile net loss to net cash used in operating activities - Depreciation of property, plant, and equipment 3,263 515 3,162 - Amortization of intangible assets 133 21 134 - Deferred income taxes 18 3 19 - Bad debt expense (1) - (2) -Inventory provision - - - Changes in operating assets and liabilities - Accounts and bills receivable 796 126 (12,934) - Inventories (2,006) (316) 3,209 - Advance to suppliers (1,342) (212) (5,049) - Prepaid expenses and other current assets (44) (7) (69) - Accounts payable 4,650 734 (5,542) - Accrued expenses and other payables (5,646) (892) (21,259) - Advance from customers (3,500) (552) 11,607 - Tax payable 556 88 177 Net cash provided by operating activities 13,984 2,205 4,818 Cash flow from investing activities Purchases of property, plant and equipment (508) (80) (734) Amount change in construction in progress (299) (47) - Advanced to suppliers – non-current - - 616 Proceeds from sale of property, plant and equipment - - 118,208 Net cash provided by investing activities (807) (127) 118,090 Cash flow from financing activities Proceeds from related party - - (23,052) Payment of capital lease obligation - - - Change in notes payable (11,538) (1,820) 10,000 Net cash used in financing activities (11,538) (1,820) (13,052) Effect of foreign exchange rate changes - 231 - Net decrease in cash and cash equivalent 1,639 489 109,856 Cash and cash equivalent At beginning of period/year 278,902 43,766 120,923 At end of period/year 280,541 44,255 230,779 SUPPLEMENTARY DISCLOSURE: Interest paid 1,058 167 1,575 Income tax paid - - - SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: Account payable for plant and equipment: 1,010 159 1,010