Fuwei Films Announces Fourth Quarter and Full Year 2018 Financial Results

BEIJING, April 30, 2019 /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, 2018.

Fuwei Films 4Q 2018 Highlights

• Net revenues were RMB90.1 million or US$13.1 million, up 14.3% year-over-year.
• Sales of specialty films were RMB39.8 million or US$5.8 million, up 23.2% year-over-year.
• Gross margin was 23.7%, compared to 14.7% a year ago.
• Basic and diluted loss per share was RMB1.1 or US$0.15, compared to loss per share of RMB3.1 a year ago.

Fuwei Films 2018 Highlights

• Net revenues were RMB333.5 million or US$48.5 million, up 14.7% year-over-year.
• Sales of specialty films were RMB148.8 million or US$21.6 million, up 37.7% year-over-year.
• Net cash provided by operating activities was RMB25.4 million or US$3.7 million, compared to RMB10.8 million a year ago.
• Gross margin was 16.4%, compared to 9.3% a year ago.
• Basic and diluted loss per share was RMB6.79 or US$0.99, compared to loss per share of RMB14.09 a year ago.

"Oversupply in the BOPET plastic films market persisted in 2018. While this impacted the Company's results, we are pleased that our revenues and gross margins continued to grow. Sales of specialty films increased 37.7% year-over-year and accounted for 44.6% of our total revenues in 2018. We believe that our focus on innovation will enable the Company to expand end-user product applications and attract new clients and expand relationships with existing customers. We are encouraged by positive trends in revenues and gross margins which we expect to enable us to better navigate the industrial and economic landscape ahead," commented by Mr. Zengyong Wang, the CEO and Chairman of the Company.

Fourth Quarter 2018 Results

Revenues for the fourth quarter of 2018 were RMB90.1 million or US$13.1 million, compared with RMB78.8 million in the fourth quarter of 2017, an increase of RMB11.3 million, or 14.3%. Sales volume accounted for a decrease of RMB7.3 million while the increase of average sales price caused an increase of RMB18.6 million.

Sales of specialty films for the fourth quarter of 2018 were RMB39.8 million or US$5.8 million, or 44.1% of total revenues, compared with RMB32.3 million or 40.9% of total revenue in the fourth quarter of 2017. The increase was mainly attributable to increase in sales volumes and average sales price compared to the prior year.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2018 and 2017 (amounts in thousands):

Sales in China for the fourth quarter of 2018 were RMB80.8 million, or US$11.8 million, or 89.7% of total revenues, compared with RMB67.5 million or 85.6% of total revenues in the fourth quarter of 2017. Sales volume accounted for a decrease of RMB3.4 million while the increase of average sales price caused an increase of RMB16.7 million.

Overseas sales for the fourth quarter of 2018 were RMB9.3 million or US$1.4 million, or 10.3% of total revenues, compared with RMB11.3 million or 14.4% of total revenues in the fourth quarter of 2017. Sales volume accounted for a decrease of RMB3.9 million while the increase of average sales price caused an increase of RMB1.9 million.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2018 and 2017(amounts in thousands):

Gross profit for the fourth quarter of 2018 was RMB21.3 million or US$3.1 million, representing a gross margin of 23.7%, compared with a gross profit of RMB11.6 million, representing a gross margin of 14.7% in the fourth quarter of 2017.

Operating expenses for the fourth quarter of 2018 were RMB19.0 million or US$2.8 million compared with RMB16.7 million in the fourth quarter of 2017.

Operating profit for the fourth quarter of 2018 was RMB2.4 million or US$0.3 million, compared with an operating loss of RMB5.1 million in the fourth quarter of 2017.

Net loss attributable to the Company for the fourth quarter of 2018 was RMB3.5 million or US$0.5 million, compared with net loss attributable to the Company of RMB10.1 million in the fourth quarter of 2017.

Basic and diluted loss per share was RMB1.1 or US$0.15, compared with basic and diluted loss per share of RMB3.1 in the fourth quarter of 2017.

2018 Full Year Results

During the fiscal year ended December 31, 2018, net revenues were RMB333.5 million (US$48.5 million), compared to RMB290.7 million during the same period in 2017, representing an increase of RMB42.8 million or 14.7%. The increase of average sales price caused an increase of RMB53.9 million and the reduction of sales volume factor made a decrease of RMB11.1 million.

In 2018, sales of specialty films were RMB148.8 million (US$21.6 million) or 44.6% of our total revenues as compared to RMB108.1 million or 37.2% in 2017, which was an increase of RMB40.7 million, or 37.7%, as compared to the same period in 2017. The increase of average sales price caused an increase of RMB7.1 million and the increase of sales volume factor made an increase of RMB33.6 million.

Sales in China in 2018 were RMB288.1 million, or US$41.9 million, or 86.4% of total revenues, compared with RMB235.1 million or 80.9% of total revenues in 2017. Sales volume accounted for an increase of RMB5.9 million while the increase of average sales price caused an increase of RMB47.1 million.

Overseas sales were RMB45.4 million or US$6.6 million, or 13.6% of total revenues, compared with RMB55.6 million or 19.1% of total revenues in 2017. The increase of average sales price caused an increase of RMB6.4 million and the reduction of sales volume factor made a decrease of RMB16.6 million.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2018 and 2017 (amounts in thousands):

Our gross margin was 16.4% for the year of 2018, as compared to a gross margin of 9.3% in 2017.

Our average unit sales price increased by 19.3% compared to last year. The unit sales cost increased by 10.0% 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 2018 compared with 2017, which contributed to the increase in our gross profit.

Our operating expenses during the year ended December 31, 2018 were RMB66.0 million, an increase of RMB5.0 million, or 8.2%, as compared to 2017.

Net loss attributable to the Company for full year 2018 was RMB22.2 million or US$3.2 million, compared with a net loss of RMB46.0 million in 2017.

Basic and diluted loss per share for the year ended December 31, 2018 was RMB6.79 or US$0.99.

Net cash provided by operating activities was RMB25.4 million for the year ended December 31, 2018 as compared to net cash provided by operating activities of RMB10.8 million for the year ended December 31, 2017.

Cash and cash equivalents on December 31, 2018 was RMB8.9 million or US$1.3 million, compared with RMB13.0 million as of December 31, 2017.

Conference Call Information

The Company will host a teleconference on Tuesday, April 30, 2019, at 9:00 a.m. ET / 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 prior to the scheduled start time.

A replay of the call can 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: 45517. The replay will be available until May 30, 2019, at 09:00 a.m. ET.

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, **, 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.:

Shiwei Yin
Investor Relations
Grayling
Phone: +1-646-284-9474
Email: shiwei.yin@grayling.com 

Financial Tables Follow

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