Fuwei Films Announces Fourth Quarter and Full Year 2017 Financial Results

-     Teleconference to be Held on Tuesday, April 24, 2018, at 9:00 a.m. EDT

BEIJING, April 24, 2018 /PRNewswire/ -- 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, 2017.

Fuwei Films 2017 Highlights

  • Net revenues were RMB290.7 million or US$44.7 million.
  • Net cash provided by operating activities was RMB10.8 million.
  • Our gross margin was 9.3%.
  • Basic and diluted loss per share was RMB14.09 or US$2.17.

"We continue to face strong competition from emerging and incumbent players which created oversupply relative to demand in the marketplace in 2017. While this has impacted the Company's financial results, we are pleased to announce that our sales volume for specialty films has continuously increased. We believe that our focus on continued innovation and R&D will enable the Company to expand end-user applications and our high-end specialty films while increasing the product portfolio, which we believe, will help us to attract new clients and expand relationships with existing customers. We are encouraged by positive trends in sales volume and gross margins that we expect to enable us to weather different industry and economic conditions in the periods ahead," commented by Mr. Zengyong Wang, the CEO and Chairman of the Company.

Fourth Quarter 2017 Results

Revenues for the fourth quarter of 2017 were RMB78.8 million or US$12.1 million, compared with RMB70.9 million in the fourth quarter of 2016, an increase of RMB7.9 million, or 11.1%. Sales volume accounted for a decrease of RMB2.8 million while the increase of average sales price caused an increase of RMB10.7 million.

Sales of specialty films for the fourth quarter of 2017 were RMB32.3 million or US$5.0 million, or 40.9% of total revenues, compared with RMB28.1 million or 39.7% of total revenue in the fourth quarter of 2016. The increase was mainly attributable to increased selling volumes compared to those in 2016.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2017 and 2016 (amounts in thousands):


Three months period ended


December 31,
2017

% of Total

December 31,
2016

% of Total


RMB

US$

RMB

Stamping and transfer film

33,357

5,127

42.3%

28,269

39.9%

Printing film

6,152

946

7.8%

4,135

5.8%

Metallized film

1,456

224

1.8%

2,111

3.0%

Specialty film

32,272

4,960

40.9%

28,141

39.7%

Base film for other applications

5,602

861

7.1%

8,247

11.6%







Total

78,839

12,118

100%

70,903

100%

Overseas sales for the fourth quarter of 2017 were RMB11.3 million or US$1.7 million, or 14.4% of total revenues, compared with RMB6.7 million or 9.5% of total revenues in the fourth quarter of 2016. Sales volume accounted for an increase of RMB3.2 million while the increase of average sales price caused an increase of RMB1.4 million.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2017 and 2016 (amounts in thousands):


Three-month period ended


December 31,
2017

% of Total

December 31,
2016

% of Total


RMB

US$

RMB

Sales in China

67,522

10,378

85.6%

64,186

90.5%

Sales in other countries

11,317

1,739

14.4%

6,717

9.5%







Total

78,839

12,117

100%

70,903

100%

Gross profit for the fourth quarter of 2017 was RMB11.6 million or US$1.8 million, representing a gross margin of 14.7%, compared with a gross profit of RMB5.5 million, representing a gross margin of 7.7% in the fourth quarter of 2016.

Operating expenses for the fourth quarter of 2017 were RMB16.7 million or US$2.6 million compared with RMB17.8 million or US$2.6million in the fourth quarter of 2016.

Operating loss for the fourth quarter of 2017 was RMB5.1 million or US$0.8 million, compared with an operating loss of RMB12.3 million or US$1.8 million in the fourth quarter of 2016.

Net loss attributable to the Company for the fourth quarter of 2017 was RMB10.1 million or US$1.6 million, compared with net loss attributable to the Company of RMB18.8 million in the fourth quarter of 2016.

Basic and diluted loss per share was RMB3.10 or US$0.48, compared with basic and diluted loss per share of RMB5.76 or US$0.83 in the fourth quarter of 2016.

2017 Full Year Results

During the fiscal year ended December 31, 2017, net revenues were RMB290.7 million or US$44.7 million, compared to RMB253.9 million during the same period in 2016, representing an increase of RMB36.8 million or 14.5%. For further analysis of the factors causing revenue increase, the increase of average sales price caused an increase of RMB32.0 million and the sales volume factor made an increase of RMB4.8 million.

In 2017, sales of specialty films were RMB108.1 million or US$16.6 million or 37.2% of our total revenues as compared to RMB96.1 million or 37.8% in 2016, which was an increase of RMB12.0 million, or 12.5%, as compared to the same period in 2016. The increase was due to the increased sales volume.

Overseas sales were RMB55.6 million or US$8.5 million, or 19.1% of total revenues, compared with RMB41.8 million or 16.5% of total revenues in 2016. For further analysis of the factors causing overseas sales increase, the increase of average sales price caused an increase of RMB5.5 million and sales volume factor made an increase of RMB8.3 million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2017 and 2016 (amounts in thousands):


For the year ended December 31,



2017

% of Total

2016

% of Total



RMB

US$

RMB

Sales in China


235,143

36,141

80.9%

212,129

83.5%

Sales in other countries


55,563

8,540

19.1%

41,797

16.5%



290,706

44,681

100.0%

253,926

100.0%

Our gross margin was 9.3% for the year of 2017, as compared to a gross margin of 7.0% in 2016. Gross margin increased by 2.3 percentage points compared to the same period in 2016. Our average unit sales price increased by 12.3% compared to last year. The unit sales cost increased by 9.5% due to the price increase of main raw materials. Consequently, the increase in sales price exceeded that cost of goods sold per unit in product during 2017 compared with 2016, which contributed to the increase in our gross profit.

Total other expense is a combination result of interest income, interest expense and others income (expense). Total other expense during the year ended December 31, 2017 was RMB11.3 million or US$1.7 million, compared to total other expense of RMB6.9 million in 2016. This is mainly attributed to the increased interest.

Income tax expense during the year ended December 31, 2017 was RMB0.8 million or US$0.1 million compared to an income tax expense of RMB5.3 million during 2016, which was mainly attributable to tax effect changes in deferred tax during 2017. We only recognized deferred tax assets for the loss of 2017 after considering the possibility of realizing the benefits under the conservatism principle.

Net loss attributable to the Company for full year 2017 was RMB46.0 million or US$7.1 million, compared with a net loss of RMB54.5 million in 2016.

Net cash provided by operating activities was RMB10.8 million for the year ended December 31, 2017 as compared to net cash used in operating activities of RMB23.2 million for the year ended December 31, 2016.

Cash and cash equivalents on December 31, 2017 was RMB12.96 million or US$1.99 million, compared with RMB13.3 million as of December 31, 2016.

Basic and diluted loss per share for the year ended December 31, 2017 was RMB14.09 or US$2.17.

Conference Call Information

The Company will host a teleconference on Tuesday, April 24, 2018 at 9:00 am EDT / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-877-407-9205 in North America, or +1-201-689-8054 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: 27774. The replay will be available until May 24, 2018, at 09:00 a.m. EDT.

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, 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.:

Vivian Chen
Investor Relations
Citigate Dewe Rogerson
Phone: +1-646-284-9427
Email: vivian.chen@citigatedewerogerson.com 

 

Financial Tables Follow

 

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

As of December 31, 2017 and 2016

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








December 31,
2017


December 31,
2016


RMB


US$


RMB

ASSETS

Current assets






Cash and cash equivalents

12,963


1,992


13,343

Restricted cash

56,501


8,684


73,421

Accounts and bills receivable, net

20,123


3,093


29,453

Inventories

24,578


3,778


25,153

Advance to suppliers

3,898


599


6,043

Prepayments and other receivables

1,404


216


6,489

Deferred tax assets – current

1,288


198


1,199

Total current assets

120,755


18,560


155,101







Property, plant and equipment, net

371,058


57,031


410,654

Construction in progress

366


56


431

Lease prepayments, net

16,830


2,587


17,358

Advance to suppliers - long term, net

1,570


241


1,861

Deferred tax assets - non current

6,901


1,061


8,032







Total assets

517,480


79,536


593,437







LIABILITIES AND EQUITY

Current liabilities






Short-term borrowings

50,000


7,685


60,000

Long-term loan, current portion 

-


-


3,300

Due to related parties 

151,074


23,220


131,747

Accounts payables

17,470


2,685


20,581

Notes payable

67,900


10,436


100,888

Advance from customers

1,976


304


3,509

Accrued expenses and other payables

5,268


810


5,204

Obligations under capital leases-current

-


-


-

Total current liabilities

293,688


45,140


325,229

Deferred tax liabilities

2,763


425


2,997







Total liabilities

296,451


45,565


328,226







Equity






Shareholders' equity 






Registered capital(of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding) 

13,323


2,048


13,323

Additional paid-in capital

311,907


47,939


311,907

Statutory reserve

37,441


5,755


37,441

Retained earnings

(144,508)


(22,210)


(98,505)

Cumulative translation adjustment

2,866


439


1,045

Total shareholders' equity

221,029


33,971


265,211







Total equity

221,029


33,971


265,211

Total liabilities and equity

517,480


79,536


593,437

 

 

FUWEI FILMS (HOLDINGS) CO., LTD and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2017, 2016 and 2015

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



The Year Ended December 31, 


2017


2016


2015


RMB

US$


RMB


RMB

Net sales

290,706

44,681


253,926


248,862

Cost of sales

263,606

40,516


236,190


248,866








Gross profit (loss)

27,100

4,165


17,736


(4)








Operating expenses:







Selling expenses

14,520

2,232


13,764


14,404

Administrative expenses

46,514

7,149


46,211


39,559

Loss on impairment of assets

-

-


-


7,219

Total operating expenses

61,034

9,381


59,975


61,182








Operating loss

(33,934)

(5,216)


(42,239)


(61,186)








Other income (expense):







- Interest income

725

111


735


1,236

- Interest expense

(9,453)

(1,453)


(7,865)


(8,333)

- Others income (expense), net

(2,533)

(389)


203


6,215

Total other income (expense)

(11,261)

(1,731)


(6,927)


(882)








Loss before provision for income taxes

(45,195)

(6,947)


(49,166)


(62,068)








Income tax (expense) benefit 

(808)

(124)


(5,317)


(7,000)








Net loss 

(46,003)

(7,071)


(54,483)


(69,068)








Net  income (loss) attributable to noncontrolling interests

-

-


-


(3)

Net loss attributable to the Company

(46,003)

(7,071)


(54,483)


(69,065)








Other comprehensive income (loss):







- Foreign currency translation adjustments attributable to noncontrolling interest

-

-


-


(37)

- Foreign currency translation adjustments attributable to the Company

1,821

280


(4)


(150)








Comprehensive income (loss) attributable to non-controlling interest

-

-


-


(40)

Comprehensive loss attribute to the Company

(44,182)

(6,791)


(54,487)


(69,215)








Net loss per share,
Basic and diluted

(14.09)

(2.17)


(16.68)


(21.15)

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, 2017, 2016 and 2015

(Amounts in thousands)



The Years Ended December 31, 


2017


2016


2015


RMB

US$


RMB


RMB

Cash flow from operating activities







Net loss

(46,003)

(7,071)


(54,483)


(69,068)

Adjustments to reconcile net loss to net cash







provided by (used in) operating activities














- Loss on Long-term assets impairment

-

-


-


7,219

- Depreciation of property, plant and equipment

42,877

6,590


43,193


44,515

- Amortization of intangible assets

528

81


524


524

- Deferred income taxes (benefit)

808

124


5,317


7,000

- Bad debt (recovery) expense

(746)

(115)


2,466


(4,484)

- Inventory provision

1,340

206


(226)


(1,106)

Changes in operating assets and liabilities 







- Investment income recorded on Fuwei Holdings' book

-

-


(1,722)


-

- Accounts and bills receivable

10,075

1,549


(21,873)


(103)

- Inventories

(766)

(118)


4,647


(4,434)

- Advance to suppliers

2,145

330


(403)


2,038

- Prepaid expenses and other current assets

75

12


18


1,347

- Accounts payable

(3,110)

(479)


(12,179)


(9,683)

- Accrued expenses and other payables

128

20


(3,597)


2,446

- Advance from customers

(1,533)

(236)


1,263


(1,145)

- Tax payable

5,009

770


13,827


(2,016)








Net cash provided by (used in) operating activities

10,827

1,663


(23,228)


(26,950)








Cash flow from investing activities







Purchases of property, plant and equipment

(3,282)

(504)


(11,218)


(222)

Restricted cash related to trade finance

16,921

2,601


(30,198)


4,884

Advanced to suppliers - non current

291

45


(421)


(718)

Amount change in construction in progress

65

10


1,269


(1,334)








Deposit for purchase

-

-


-


21,000








Net cash used in (provided by) investing activities

13,995

2,152


(40,568)


23,610








Cash flow from financing activities







Principal payments of bank loans

(3,300)

(507)


(3,350)


(3,350)

Proceeds from short-term bank loans

(10,000)

(1,537)


60,000


-

Proceeds from related party

19,327

2,970


(11,333)


30,102

Payment of capital lease obligation

-

-


(302)


(8,260)

Change in notes payable

(32,988)

(5,070)


15,108


(9,759)















Net cash provided by (used in) financing activities

(26,961)

(4,144)


60,123


8,733








Effect of foreign exchange rate changes

1,759

399


2,661


(58)








Net (decrease) increase  in cash and cash equivalent

(380)

70


(1,012)


5,335








Cash and cash equivalent







At beginning of period/year

13,343

1,922


14,355


9,020

At end of period/year

12,963

1,992


13,343


14,355








SUPPLEMENTARY DISCLOSURE:







Interest paid

9,453

1,453


7,865


8,333

Income tax paid

-

-


-


-








SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:







Account payable for plant and equipment:

1,374

211


1,597


2,075

Obligations for acquired equipment under capital lease:

-

-


-


302

 

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