Fuwei Films Announces Second Quarter and First Half 2016 Unaudited Financial Results

BEIJING, August 26, 2016 /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, 2016.

Second Quarter 2016 Financial Highlights

• Net sales during the second quarter ended June 30, 2016 were RMB59.3 million or US$8.9 million.
• Sales of specialty films were RMB23.5 million or US$3.5 million or 39.7% of our total revenues.
• Overseas sales were RMB11.2 million or US$1.7 million, or 18.9% of total revenues.
• Our gross profit was RMB5.6 million or US$0.8 million, representing a gross profit margin of 9.5%.

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 Highlights For The Three Months Ended June 30, 2016

Net sales during the three months ended June 30, 2016 were RMB59.3 million or US$8.9 million, compared to RMB66.7 million during the same period in 2015, representing a decrease of RMB7.4 million or 11.1%, mainly due to a 5.9% decrease in average sales price and a 5.5% decrease of sales volume arising from stronger competition in China. The reduction of average sales price caused a decrease of RMB3.7 million and the sales volume decrease caused a decrease of RMB3.7 million.

In the three months ended June 30, 2016, sales of specialty films were RMB23.5 million or US$3.5 million or 39.7% of our total revenues as compared to RMB21.3 million or 31.9% in the same period of 2015, which was an increase of RMB2.2 million, or 10.3% as compared to the same period in 2015. The reduction of average sales price caused a decrease of RMB0.7 million and the increase in the sales volume caused an increase of RMB2.9 million. The increase was largely attributable to the increase in sales volume.

Overseas sales were RMB11.2 million or US$1.7 million for the three months ended June 30, 2016, or 18.9% of total revenues, compared with RMB15.1 million or 22.7% of total revenues in the second quarter of 2015. The decrease of average sales price caused a decrease of RMB1.4 million and the decrease in sales volume resulted in a decrease of RMB2.5 million.

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

Our gross profit was RMB5.6 million or US$0.8 million for the three months ended June 30, 2016, representing a gross margin of 9.5%, as compared to a gross margin of 0.4% for the same period in 2015. Correspondingly, gross margin increased by 9.1 percentage points compared to the same period in 2015. Our average product sales prices decreased by 5.9% compared to the same period last year while the average cost of goods sold decreased by 14.4% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold was larger than that in sales revenue during the three months ended June 30, 2016 compared with the same period in 2015, which resulted in an increase in our gross profit.

Operating expenses for the three months ended June 30, 2016 were RMB14.5 million or US$2.2 million, as compared to RMB13.0 million for the same period in 2015, which was RMB1.5 million, or 11.5% higher than the same period in 2015. This increase was mainly due to depreciation charged to general and administrative expenses in the accounting period in which they are incurred as a result of lack of manufacturing from the third production line since April 2015 and increased allowance for the doubtful accounts receivable.

Net loss attributable to the Company during the three months ended June 30, 2016 was RMB10.2 million or US$1.5 million compared to RMB14.7 million during the same period in 2015, representing a decrease of RMB4.5 million for the same period in 2015.

Basic and diluted net loss per share was RMB0.78 or US$0.12 and RMB1.12 for the three-month period ended June 30, 2016 and 2015, respectively.

Total shareholders' equity was RMB297.37 million or US$44.75 million as of June 30, 2016, compared with RMB319.7 million as of December 31, 2015.

As of June 30, 2016, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.

Financial Highlights for the Six Months Ended June 30, 2016

Net sales during the six months ended June 30, 2016 were RMB121.5 million or US$18.3 million, compared to RMB119.5 million in the same period in 2015, representing an increase of RMB2.0 million or 1.7%, mainly due to the increased sales volume.

In the six months ended June 30, 2016, sales of specialty films were RMB45.3 million or US$6.8 million or 37.3% of our total revenues as compared to RMB36.3 million or 30.4% in the same period of 2015, which was an increase of RMB9.0 million, or 24.8% as compared to the same period in 2015. The reduction in average sales price caused a decrease of RMB2.0 million and the increase in the sales volume caused an increase of RMB11.0 million.

Overseas sales during the six months ended June 30, 2016 were RMB23.7 million or US$3.6 million, or 19.5% of total revenues, compared with RMB28.2 million or 23.6% of total revenues in the same period in 2015. This was RMB4.5 million lower than the same period in 2015. The decrease in average sales price and sales volume caused a decrease of RMB2.1 million and RMB2.4 million, respectively.

Our gross profit was RMB11.2 million or US$1.7 million for the six months ended June 30, 2016, representing a gross margin of 9.2%, as compared to a gross margin of (6.3)% for the same period in 2015. Correspondingly, gross margin increased by 15.5 percentage points. Compared to the same period last year, our average product sales prices decreased by 4.2% while the average cost of goods sold decreased by 18.2%. Consequently, the amount of decrease in cost of goods sold was larger than that in sales revenue during the six months ended June 30, 2016 compared with the same period in 2015, which resulted in an increase in our gross margin.

Operating expenses for the six months ended June 30, 2016 were RMB29.5 million or US$4.4 million, compared to RMB21.8 million in the same period in 2015, which was RMB7.7 million or 35.3% higher. This increase is mainly due to depreciation charged to general and administrative expenses in the accounting period as a result of lack of manufacturing from the third production line since April 2015 and increased allowance for doubtful accounts receivable.

Net loss attributable to the Company during the six months ended June 30, 2016 was RMB22.3 million or US$3.3 million compared to RMB29.6 million during the same period in 2015, representing a decrease of RMB7.3 million due to the factors described above.

Conference Call Information

The Company will host a teleconference on Friday, August 26, 2016, 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 reply ID: 10078. The replay will be available until September 26, 2016, 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 trends affecting the global economy, including the devaluation of the RMB by China in August 2016; 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

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