Fuwei Films Announces Fourth Quarter and Full Year 2021 Financial Results

BEIJING, April 29, 2022 /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, 2021.

4Q 2021 Highlights

• Net revenues were RMB92.6 million or US$14.5 million
• Sales of specialty films were RMB71.1 million or US$11.2 million, up 14.1% year-over-year
• Gross margin was 30.8%, down from 42.2% a year ago
• Net income attributable to the Company was RMB11.4 million or US$1.8 million
• Basic and diluted earnings per share was RMB3.48 or US$0.55

Full Year 2021 Highlights

• Net revenues were RMB396.8 million or US$62.3 million
• Sales of specialty films were RMB277.3 million or US$43.5 million, up 35.5% year-over-year
• Net income attributable to the Company was RMB89.2 million or US$14.0 million, up from a net income of RMB19.6 million in 2020
• Basic and diluted earnings per share was RMB27.32 or US$4.29, up from a profit per share of RMB6.00 a year ago
• Net cash provided by operating activities was RMB79.9 million or US$12.5 million, compared to RMB117.5 million a year ago

"In 2021, our revenues and gross margins continued to grow. Sales of specialty films increased by 35.5% year-over-year and accounted for 69.9% of our total revenues for the year. Our gross margin was 37.5% in 2021. We are encouraged by positive trends recorded in both revenues and gross margins, which we expect to enable us to better navigate the industrial and economic landscape ahead. We believe that our focus on innovation will allow the Company to expand end-user product applications, attract new clients, and expand relationships with existing customers," commented Mr. Lei Yan, CEO and Chairman of the Company.

Fourth Quarter 2021 Results

Revenues for the fourth quarter of 2021 were RMB92.6 million or US$14.5 million, compared with RMB86.4 million in the fourth quarter of 2020, an increase of RMB6.2 million, or 7.2%. Sales volume accounted for an increase of RMB0.6 million, while the increase in average sales price resulted in an increase of RMB5.6 million.

Sales of specialty films for the fourth quarter of 2021 were RMB71.1 million or US$11.2 million, accounting for 76.8% of total revenues, compared with RMB62.3 million or 72.1% of total revenue in the fourth quarter of 2020. Higher sales volume accounted for an increase of RMB5.5 million, while the rise in average sales price resulted in an increase of RMB3.3 million.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2021, and 2020 (amounts in thousands):

Sales in China for the fourth quarter of 2021 were RMB86.6 million, or US$13.6 million,  representing 93.6% of total revenues, compared with RMB80.5 million or 93.2% of total revenues recorded in the fourth quarter of 2020. Higher sales volume accounted for an increase of RMB0.3 million, while the rise in average sales price explained the increase of RMB5.8 million.

Overseas sales for the fourth quarter of 2021 amounted to RMB5.9 million or US$0.9 million,  representing 6.4% of total revenues, compared with RMB5.9 million or 6.8% of total revenues in the fourth quarter of 2020.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2021, and 2020 (amounts in thousands):

Gross profit for the fourth quarter of 2021 was RMB28.5 million or US$4.5 million, representing a gross margin of 30.8%, compared with a gross profit of RMB36.5 million, or a gross margin of 42.2% in the fourth quarter of 2020.

Operating expenses for the fourth quarter of 2021 totaled RMB17.9 million or US$2.8 million, compared with RMB60.6 million in the fourth quarter of 2020.

Net income attributable to the Company for the fourth quarter of 2021 was RMB11.4 million or US$1.8 million, compared with a net loss of RMB20.9 million in the fourth quarter of 2020.

Basic and diluted earnings per share was RMB3.48 or US$0.55, compared with basic and diluted loss per share of RMB6.39 in the fourth quarter of 2020.

2021 Full Year Results

During the fiscal year ended December 31, 2021, net revenues reached RMB396.8 million (US$62.3 million), compared to RMB336.8 million in 2020, representing an increase of RMB60.0 million, or 17.8%.

In 2021, sales of specialty films were RMB277.3 million (US$43.5 million), accounting for 69.9% of our total revenues as compared to RMB204.7 million, or 60.8% in 2020, representing an increase of RMB72.6 million, or 35.5% above those recorded in 2020. Higher sales volume led to an increase of RMB59.0 million, and an RMB13.6 million increase from the rise in average sales price.

Overseas sales were RMB39.4 million (US$6.2 million) or 9.9% of total revenues, compared with RMB27.0 million or 8.0% of total revenues in 2020. The rise in average sales price caused an increase of RMB2.5 million, and the higher sales volume explained the RMB9.9 million increase.

The following is a breakdown of domestic versus overseas sales for the years ended December 31, 2021, and 2020 (amounts in thousands):

Our gross profit for the year ended December 31, 2021, was RMB148.9 million (US$23.4 million), up from RMB 136.7 million in 2020. Our average unit sales price rose 11.0% when compared to last year. The unit sales cost increased 16.7% due to the higher raw materials prices. Consequently, the increase in cost of goods sold per unit exceeded that of sales price during 2021 compared with 2020, contributing to the decrease in our gross margin. Our gross margin was 37.5% for the year 2021, compared to a gross margin of 40.6% in 2020.

Our operating expenses during the year ended December 31, 2021, were RMB54.1 million (US$8.5 million), a decrease of RMB61.2 million, or 53.1%, as compared to 2020. The decrease was mainly due to the reduction in loss on impairment of assets held for sale and depreciation of property, plant, and equipment.

Net income attributable to the Company for the full year of 2021 was RMB89.2 million or US$14.0 million, up from a net profit attributable to the Company of RMB19.6 million in 2020.

Basic and diluted earnings per share for the year ended December 31, 2021, was RMB27.32 or US$4.29, up from a profit per share of RMB6.00 a year ago.

Net cash provided by operating activities was RMB79.9 million or US$12.5 million for the year ended December 31, 2021, as compared to net cash provided by operating activities of RMB117.5 million for the year ended December 31, 2020.

Cash and cash equivalents on December 31, 2021 amounted to RMB250.6 million or US$39.3 million, compared with RMB113.4 million as of December 31, 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 for packaging 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 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, uncertainty around coronavirus (COVID-19) outbreak and the effects of government and other measures seeking to contain its spread; risks related to an economic downturn or recession in the United States and in other countries around the world; and changes in political, business, and economic conditions, 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 the information contained in the forward-looking statements as a result of the risk factors.

Financial Tables Follow

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