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Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2017

2017-05-19 04:01
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-Teleconference to be Held on Friday, May 19, 2017 at 9:00 am EDT–

BEIJING, May 18, , May 19, 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 first quarter of 2017 ended March 31, 2017.

Highlights

Net sales during the first quarter ended March 31, 2017 were RMB67.9 million or US$9.9 million, compared to RMB62.1 million, during the same period in 2016, representing an increase of RMB5.8 million or 9.3%, mainly due to the increased sales price.

Basic and diluted net loss per share was RMB3.72 or US$0.54 and RMB3.69 for the three-month period ended March 31, 2017 and 2016, respectively.

Our gross profit was RMB3.8 million or US$0.5 million for the first quarter ended March 31, 2017, representing a gross margin of 5.5%, as compared to a gross margin of 9.0% for the same period in 2016. Correspondingly, gross margin rate decreased by 3.5 percentage points compared to the same period in 2016.

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."

First Quarter 2017 Results

Net sales during the first quarter ended March 31, 2017 were RMB67.9 million or US$9.9 million, compared to RMB62.1 million, during the same period in 2016, representing an increase of RMB5.8 million or 9.3%, mainly due to the increased sales price.

In the first quarter of 2017, sales of specialty films were RMB21.8 million or US$3.2 million or 32.0% of our total revenues as compared to RMB21.8 million or 35.0% in the same period of 2016.

The following is a breakdown of commodity and specialty film sales (amounts in thousands):


Three-Month Period Ended
March 31, 2017

% of 
Total

Three-Month Period Ended
March 31, 2016

% of 
Total


RMB

US$


RMB


Stamping and transfer film

27,071

3,933

39.9%

23,783

38.2%

Printing film

6,270

911

9.2%

2,410

3.9%

Metallization film

2,618

380

3.9%

794

1.3%

Specialty film

21,762

3,162

32.0%

21,759

35.0%

Base film for other application

10,223

1,485

15.0%

13,401

21.6%








67,944

9,871

100.0%

62,147

100.0%

Overseas sales were RMB13.2 million or US$1.9 million, or 19.4% of total revenues, compared with RMB12.5 million or 20.1% of total revenues in the first quarter of 2016, representing an increase of RMB0.7 million or 5.6%. While a decrease in sales volume caused a decrease of RMB0.2 million, this was offset by an increase of RMB0.9 million caused by the increase of sales price.

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


Three-Month Period Ended

% of 

Three-Month Period Ended

% of 


March 31, 2017

Total

March 31, 2016

Total


RMB

US$


RMB


Sales in China

54,730

7,951

80.6%

49,632

79.9%

Sales in other countries

13,214

1,920

19.4%

12,515

20.1%








67,944

9,871

100.0%

62,147

100.0%

Our gross profit was RMB3.8 million or US$0.5 million for the first quarter ended March 31, 2017, representing a gross margin of 5.5%, as compared to a gross margin of 9.0% for the same period in 2016. Correspondingly, gross margin rate decreased by 3.5 percentage points compared to the same period in 2016. Our average cost of goods sold increased by 13.2% compared to the same period in 2016 due to the price increase of main raw materials. Consequently, the increase in the average cost of goods sold was significantly higher than that in average product sales prices during the first quarter ended March 31, 2017, which contributed to the decrease in our gross margin compared with the same period in 2016.

Operating expenses for the first quarter ended March 31, 2017 were RMB13.8 million or US$2.0 million, which was RMB1.2 million, or 8.0% lower than the same period in 2016. This decrease was mainly due to the decreased allowance for doubtful accounts receivable.

Net loss attributable to the Company during the first quarter ended March 31, 2017 was RMB12.2 million or US$1.8 million compared to net loss attributable to the Company of RMB12.1 million during the same period in 2016.

Basic and diluted net loss per share was RMB3.72 or US$0.54 and RMB3.69 for the three-month period ended March 31, 2017 and 2016, respectively.

Total shareholders' equity was RMB253.3 million or US$36.8 million as of March 31, 2017, compared with RMB265.2 million as of December 31, 2016.

As of March 31, 2017, the Company had 3,265,837 basic and diluted ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Friday, May 19, 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: 10398. The replay will be available until June 19, 2017, at 11:59 p.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 operate its third 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 Officer
Phone: +86-133-615-59266
Email: fuweiIR@fuweifilms.com

In the U.S.:

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 MARCH 31, 2017 AND DECEMBER 31, 2016

(amounts in thousands except share and per share value)

(Unaudited)







March 31,
2017


December 31,
2016


RMB

US$


RMB

ASSETS





Current assets





Cash and cash equivalents

21,928

3,186


13,343

Restricted cash

45,501

6,610


73,421

Accounts and bills receivable, net

24,260

3,525


29,453

Inventories

24,926

3,621


25,153

Advance to suppliers

10,727

1,558


6,043

Prepayments and other receivables

3,080

447


6,489

Deferred tax assets - current

1,242

180


1,199

Total current assets

131,664

19,127


155,101






Plant, properties and equipment, net

399,687

58,067


410,654

Construction in progress

431

63


431

Lease prepayments, net

17,227

2,503


17,358

Advance to suppliers - long term, net

532

77


1,861

Deferred tax assets - non current

7,996

1,162


8,032






Total assets

557,537

80,999


593,437






LIABILITIES AND EQUITY





Current liabilities





Short-term borrowings

60,000

8,717


60,000

Long-term loan, current portion

3,300

479


3,300

Due to related parties 

136,141

19,779


131,747

Accounts payables 

18,471

2,683


20,581

Notes payable

75,500

10,969


100,888

Advance from customers

2,565

373


3,509

Accrued expenses and other payables

5,291

769


5,204

Total current liabilities 

301,268

43,769


325,229






Deferred tax liabilities

2,939

427


2,997






Total liabilities

304,207

44,196


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

1,936


13,323

Additional paid-in capital

311,907

45,314


311,907

Statutory reserve

37,441

5,439


37,441

Accumulated deficit

(110,662)

(16,077)


(98,505)

Cumulative translation adjustment

1,321

191


1,045

Total shareholders' equity

253,330

36,803


265,211

Total equity

253,330

36,803


265,211

Total liabilities and equity

557,537

80,999


593,437
















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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2017 AND 2016

(amounts in thousands except share and per share value)

(Unaudited)







The Three-Month Period
Ended March 31,  


2017


2016


RMB

US$


RMB

Net sales

67,944

9,871


62,147

Cost of sales 

64,187

9,325


56,558






Gross Profit

3,757

546


5,589






Operating expenses 





Selling expenses 

3,506

509


2,949

Administrative expenses 

10,266

1,491


12,048

Total operating expenses 

13,772

2,000


14,997






Operating loss  

(10,015)

(1,454)


(9,408)






Other income (expense) 





- Interest income 

286

42


218

- Interest expense 

(2,446)

(355)


(1,754)

- Others (expense) income, net 

(47)

(7)


(1,529)






Total other expense

(2,207)

(320)


(3,065)






Loss before provision for income taxes 

(12,222)

(1,774)


(12,473)






Income tax benefit expense

65

9


418






Net loss  

(12,157)

(1,765)


(12,055)






Net loss attributable to non-controlling interests 

-

-


-

Net loss attributable to the Company 

(12,157)

(1,765)


(12,055)






Other comprehensive income 





- Foreign currency translation adjustments attributable to non-controlling interest

-

-


4

- Foreign currency translation adjustments attributable to the Company

276

40


(5)






Comprehensive loss attributable to non-controlling interest

-

-


4

Comprehensive loss attributable to the Company

(11,881)

(1,725)


(12,060)






Loss per share,

(3.72)

(0.54)


(3.69)

Basic and diluted 





Weighted average number ordinary shares,

3,265,837

3,265,837


3,265,837

Basic and diluted 




















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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2017AND 2016

(amounts in thousands except share and per share value)

(Unaudited)







The Three-Month Period
Ended March 31,  


2017


2016


RMB

US$


RMB

Cash flow from operating activities





Net loss

(12,157)

(1,766)


(12,055)

Adjustments to reconcile net loss to net cash





used in operating activities





- Depreciation of property, plant and equipment

10,981

1,595


10,668

- Amortization of intangible assets

131

19


131

- Deferred income taxes

(65)

(9)


(418)

- Bad debt expense

287

42


1,723

-Inventory provision

-

-


(226)

Changes in operating assets and liabilities 





- Accounts and bills receivable

4,906

713


(13,623)

- Inventories

227

33


5,411

- Advance to suppliers

(4,683)

(680)


42

- Prepaid expenses and other current assets

47

7


(373)

- Accounts payable

(2,110)

(308)


(2,399)

- Accrued expenses and other payables

97

14


(1,087)

- Advance from customers

(945)

(137)


(349)

- Tax payable

3,361

488


10,012






Net cash used in operating activities

77

11


(2,543)






Cash flow from investing activities





Purchases of property, plant and equipment

(14)

(2)


498

Restricted cash related to trade finance

27,921

4,056


(3,414)

Advanced to suppliers - non current 

1,329

193


196

Amount change in construction in progress

-

-


(2,195)






Net cash (used in) provided by investing activities

29,236

4,247


(4,915)






Cash flow from financing activities





Proceeds from related party

4,393

638


1,583

Payment of capital lease obligation 

-

-


(302)

Change in notes payable

(25,388)

(3,688)


1,270






Net cash provided by (used in)financing activities

(20,995)

(3,050)


2,551






Effect of foreign exchange rate changes 

267

56


(19)






Net decrease in cash and cash equivalent

8,585

1,264


(4,926)






Cash and cash equivalent





At beginning of period/year

13,343

1,922


14,355

At end of period/year

21,928

3,186


9,429






SUPPLEMENTARY DISCLOSURE:





Interest paid

2,446

355


1,754

Income tax paid

-

-


-






SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: 





Account payable for plant and equipment: 

1,231

179


2,121

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/fuwei-films-announces-its-unaudited-financial-results-for-the-first-quarter-of-2017-300460248.html

Source: Fuwei Films (Holdings) Co., Ltd.

Related stocks: NASDAQ-SMALL:FFHL

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