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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, Nov. 24, 2020 /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 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: [email protected]

In the U.S.:

Shiwei Yin
Investor Relations
Grayling
Phone: +1-646-284-9474
Email: [email protected]

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

Related Links :

http://www.fuweifilms.com


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