Fuwei Films Announces Second Quarter and First Half 2017 Unaudited Financial Results

-Teleconference to be held on Friday, August 18, 2017 at 9:00 am EDT-

BEIJING, Aug. 18, 2017 /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 unaudited financial results for the three-month and six-month periods ended June 30, 2017.

Second Quarter 2017 Financial Highlights

  • Net sales during the second quarter ended June 30, 2017 were RMB70.1 million or US$10.3 million.
  • Sales of specialty films were RMB25.6 million or US$3.8 million or 36.5% of our total revenues.
  • Overseas sales were RMB15.8 million or US$2.3 million, or 22.5% of total revenues.
  • Our gross profit was RMB5.0 million or US$0.7 million for the second quarter ended June 30, 2017, representing a gross profit rate of 7.2%.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, "While we continue to face strong competition from emerging and incumbent players in the marketplace, which has led to oversupply relative to demand in the marketplace, we are encouraged by positive trends in the sales of specialty films. We believe our commitment to innovation and R&D has expanded our end-user applications that will enable the Company to capitalize on these opportunities despite challenging industry and economic conditions."

Financial Results for the Three Months Ended June 30, 2017

Net sales during the second quarter ended June 30, 2017 were RMB70.1 million or US$10.3 million, compared to RMB59.3 million during the same period in 2016, representing an increase of RMB10.8 million or 18.2%. The increase of average sales price caused an increase of RMB7.0 million and the sales volume increase caused an increase of RMB3.8 million.

In the second quarter of 2017, sales of specialty films were RMB25.6 million or US$3.8 million or 36.5% of our total revenues as compared to RMB23.5 million or 39.7% in the same period of 2016, which was an increase of RMB2.1 million, or 8.9% as compared to the same period in 2016. The increase of average sales price caused an increase of RMB0.3 million and the increase in the sales volume caused an increase of RMB1.8 million. The increase was largely attributable to the increase in sales volume.

Overseas sales were RMB15.8 million or US$2.3 million, or 22.5% of total revenues, compared with RMB11.2 million or 18.9% of total revenues in the second quarter of 2016. The increase of average sales price caused an increase of RMB1.9 million and the increase in sales volume resulted in an increase of RMB2.7 million.

The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):



Three-Month
Period Ended
 June 30, 2017

% of Total

Three-Month
Period Ended
June 30, 2016

% of Total



RMB

US$

RMB

Sales in China


54,277

8,006

77.5%

48,106

81.1%

Sales in other countries


15,789

2,329

22.5%

11,210

18.9%










70,066

10,335

100.0%

59,316

100.0%

Our gross profit was RMB5.0 million or US$0.7 million for the second quarter ended June 30, 2017, representing a gross profit rate of 7.2%, as compared to a gross profit rate of 9.5% for the same period in 2016. Correspondingly, gross profit rate decreased by 2.3 percentage point compared to the same period in 2016. Our average product sales prices increased by 11.1% compared to the same period last year while the average cost of goods sold increased by 13.9% compared to the same period last year. Consequently, the amount of increase in cost of goods sold was greater than that in sales revenue during the second quarter ended June 30, 2017 compared with the same period in 2016, which resulted in a decrease in our gross profit.

Operating expenses for the second quarter ended June 30, 2017 were RMB14.2 million or US$2.1 million, as compared to RMB14.5 million for the same period in 2016.

Net loss attributable to the Company during the second quarter ended June 30, 2017 was RMB11.6 million or US$1.7 million compared to net loss attributable to the Company of RMB10.2 million during the same period in 2016, representing an increase of RMB1.4 million for the same period in 2016.

Basic and diluted net loss per share was RMB3.57 or US$0.53 and RMB3.12 for the three months period ended June 30, 2017 and 2016, respectively.

Total shareholders' equity was RMB241.2 million or US$35.58 million as of June 30, 2017, compared with RMB265.2 million as of December 31, 2016.

As of June 30, 2017, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.

Financial Results for the Six Months Ended June 30, 2017

Net sales during the six-month period ended June 30, 2017 were RMB138.0 million or US$20.4 million, compared to RMB121.5 million in the same period in 2016, representing an increase of RMB16.5 million or 13.6%. The increase in average sales price caused an increase of RMB12.6 million and the increase in the sales volume caused an increase of RMB3.9 million.

In the six-month period ended June 30, 2017, sales of specialty films were RMB47.3 million or US$7.0 million or 34.3% of our total revenues as compared to RMB45.3 million or 37.3% in the same period of 2016, which was an increase of RMB2.0 million, or 4.4% as compared to the same period in 2016. The increase in the sales volume caused an increase of RMB1.8 million and the increase in average sales price caused an increase of RMB0.2 million.

Overseas sales during the six months ended June 30, 2017 were RMB29.0 million or US$4.3 million, or 21.0% of total revenues, compared with RMB23.7 million or 19.5% of total revenues in the same period in 2016. This was RMB5.3 million higher than the same period in 2016. The increase in sales volume resulted in an increase of RMB2.5 million and the increase in average sales price caused an increase of RMB2.8 million.

The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):



Six-Month
Period Ended
 June 30, 2017

% of Total

Six-Month
Period Ended
June 30, 2016

% of Total



RMB

US$

RMB

Sales in China


109,008

16,080

79.0%

97,738

80.5%

Sales in other countries


29,002

4,278

21.0%

23,725

19.5%










138,010

20,358

100.0%

121,463

100.0%

Our gross profit was RMB8.8 million or US$1.3 million for the first six months ended June 30, 2017, representing a gross margin of 6.4%, as compared to a gross loss rate of 9.2% for the same period in 2016. Correspondingly, gross margin decreased by 2.8 percentage points. Our average product sales prices increased by 10.0% compared to the same period last year while the average cost of goods sold increased by 13.5% compared to the same period last year. Consequently, the amount of increase in cost of goods sold was higher than that in sales revenue during the six months ended June 30, 2017 compared with the same period in 2016, which resulted in a decrease in our gross margin.

Operating expenses for the six months ended June 30, 2017 were RMB28.0 million or US$4.1 million, compared to RMB29.5 million in the same period in 2016, which was RMB1.5 million lower than the same period in 2016. This decrease was mainly due to decreased allowance for doubtful accounts receivable.

Net loss attributable to the Company during the first half of 2017 was RMB23.8 million or US$3.5 million compared to net loss attributable to the Company of RMB22.3 million during the same period in 2016, representing an increase of RMB1.5 million from the same period in 2016 due to the factors described above.

Conference Call Information

The Company will host a teleconference on Friday, August 18, 2017, at 9:00 a.m. 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: 19863. The replay will be available until September 18, 2017, 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 trends affecting the global economy, including the devaluation of the RMB by China in August 2017; competition in the BOPET film industry; growth of, and risks inherent in, the BOPET film industry in China; uncertainty as to future profitability 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.:

Ms. Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: vivian.chen@grayling.com

 

Financial Tables to Follow

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2017 AND DECEMBER 31, 2016

(amounts in thousands except share and per share value)

(Unaudited)




June 30,
2017


December 31,
2016


RMB

US$


RMB

ASSETS

Current assets






Cash and cash equivalents


16,452

2,427


13,343

Restricted cash


30,001

4,425


73,421

Accounts and bills receivable, net


29,039

4,283


29,453

Inventories


24,907

3,674


25,153

Advance to suppliers


6,073

896


6,043

Prepayments and other receivables


3,634

536


6,489

Deferred tax assets - current


1,267

187


1,199

Total current assets


111,373

16,428


155,101







Property, plant and equipment, net


389,373

57,436


410,654

Construction in progress


2,588

382


431

Lease prepayments, net


17,096

2,522


17,358

Advance to suppliers - long term, net


2,118

312


1,861

Deferred tax assets - non current


7,961

1,174


8,032







Total assets


530,509

78,254


593,437








Current liabilities






Short-term borrowings


49,500

7,302


60,000

Long-term loan, current portion


1,625

240


3,300

Due to related parties


147,069

21,694


131,747

Accounts payables


19,092

2,816


20,581

Notes payable


60,000

8,850


100,888

Advance from customers


3,680

543


3,509


5,465

806


5,204

Total current liabilities


286,431

42,251


325,229







Deferred tax liabilities


2,880

425


2,997







Total liabilities


289,311

42,676


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

1,965


13,323

Additional paid-in capital


311,907

46,009


311,907

Statutory reserve


37,441

5,523


37,441

(Accumulated deficit)


(122,307)

(18,041)


(98,505)

Cumulative translation adjustment


834

122


1,045

Total shareholders' equity


241,198

35,578


265,211

Total equity


241,198

35,578


265,211

Total liabilities and equity


530,509

78,254


593,437

 

 

 

 

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, 2017 AND 2016

(amounts in thousands except share and per share value)

(Unaudited)




The Three-Month Period Ended
June 30,


The Six-Month Period
Ended June 30, 



2017


2016


2017


2016


RMB

US$


RMB


RMB

US$


RMB

Net sales


70,066

10,335


59,316


138,010

20,358


121,463

Cost of sales


65,041

9,594


53,690


129,228

19,062


110,248












Gross margin


5,025

741


5,626


8,782

1,296


11,215












Operating expenses











Selling expenses


3,701

546


3,340


7,207

1,063


6,289

Administrative expenses


10,486

1,547


11,149


20,752

3,061


23,197

Total operating expenses


14,187

2,093


14,489


27,959

4,124


29,486












Operating loss 


(9,162)

(1,352)


(8,863)


(19,177)

(2,828)


(18,271)












Other income (expense)











- Interest income


217

32


134


503

74


352

- Interest expense


(2,407)

(355)


(1,707)


(4,853)

(716)


(3,461)

- Others income (expense), net


(342)

(50)


175


(389)

(57)


(1,354)

Total other expenses


(2,532)

(373)


(1,398)


(4,739)

(699)


(4,463)












Loss before provision for income taxes


(11,694)

(1,725)


(10,261)


(23,196)

(3,527)


(22,734)

Income tax benefit


49

7


64


114

17


482












Net loss


(11,645)

(1,718)


(10,197)


(23,802)

(3,510)


(22,252)












Net (loss) income attributable to non-controlling interests


-

-


-


-

-


-

Net loss attributable to the Company


(11,645)

(1,718)


(10,197)


(23,802)

(3,510)


(22,252)

Other comprehensive income (loss)











- Foreign currency translation adjustments attributable to non-controlling interest


-

-


(25)


-

-


(21)

- Foreign currency translation adjustments attributable to the Company


(487)

(72)


(74)


(211)

(31)


(79)












Comprehensive loss attributable to non-controlling interest


-

-


(25)


-

-


(21)

Comprehensive loss attributable to the Company


(12,132)

(1,790)


(10,271)


(24,013)

(3,541)


(22,331)












Loss per share,
Basic and diluted


(3.57)

(0.53)


(3.12)


(7.29)

(1.08)


(6.81)

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, 2017 AND 2016

(amounts in thousands except share and per share value)

(Unaudited)



The Six-Month Period Ended June 30, 



2017


2016



RMB

US$


RMB

Cash flow from operating activities






Net loss


(23,802)

(3,511)


(22,252)

Adjustments to reconcile net loss to net cash






used in operating activities












- Depreciation of property, plant and equipment


21,728

3,205


21,364

- Amortization of intangible assets


262

39


261

- Deferred income taxes


(114)

(17)


(482)

- Bad debt recovery


512

76


2,197

-Inventory provision


(57)

(8)


(226)

Changes in operating assets and liabilities 






- Accounts and bills receivable


(98)

(14)


(13,076)

- Inventories


303

45


1,869

- Advance to suppliers


(30)

(4)


(2,699)

- Prepaid expenses and other current assets


(1,104)

(163)


72

- Accounts payable


(1,489)

(221)


(341)

- Accrued expenses and other payables


288

42


(1,045)

- Advance from customers


171

25


(308)

- Tax payable


3,959

584


9,974







Net cash provided by (used in) operating activities


529

78


(4,692)







Cash flow from investing activities






Purchases of property, plant and equipment


(447)

(66)


(2,722)

Restricted cash related to trade finance


43,421

6,405


(9,344)

Advanced to suppliers - non current


(257)

(38)


(266)

Amount change in construction in progress


(2,157)

(318)


(1,496)







Net cash provided by (used in) investing activities


40,560

5,983


(13,828)







Cash flow from financing activities






Principal payments of bank loans


(1,675)

(247)


(1,675)

Proceeds from short-term bank loans


(10,500)

(1,549)


-

Proceeds from related party


15,322

2,260


3,167

Payment of capital lease obligation


-

-


(302)

Change in notes payable


(40,888)

(6,031)


11,450













Net cash (used in) provided by financing activities


(37,741)

(5,567)


12,640







Effect of foreign exchange rate changes


(239)

11


(29)







Net decrease( increase) in cash and cash equivalent


3,109

505


(5,909)







Cash and cash equivalent






At beginning of period


13,343

1,922


14,355

At end of period


16,452

2,427


8,446







SUPPLEMENTARY DISCLOSURE:






Interest paid


4,853

716


3,461

Income tax paid


-

-


-







SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:


1,398

206


2,354

Obligations for acquired equipment under capital lease:


-

-


-

 

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