Fuwei Films Announces Third Quarter of 2019 Unaudited Financial Results

BEIJING, Nov. 26, 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 unaudited financial results for the three-month and nine-month periods ended September 30, 2019.

Third Quarter 2019 Financial Highlights

• Net sales were RMB79.6 million (US$11.1 million), compared to RMB86.9 million during the same period in 2018.
• Sales of specialty films were RMB40.6 million (US$5.7 million) or 51.0% of total revenues as compared to RMB45.3 million or 52.2% of total revenues in the same period of 2018.
• Overseas sales were RMB11.6 million (US$1.6 million) or 14.6% of total revenues, compared with RMB8.5 million or 9.8% of total revenues in the third quarter of 2018.
• Gross profit was RMB21.6 million (US$3.0 million), representing a gross margin rate of 27.1%, as compared to gross profit of RMB17.1 million and a gross margin rate of 19.6% for the same period in 2018.
• Net profit attributable to the Company was RMB3.4 million (US$0.5 million), compared to net loss attributable to the Company of RMB1.8 million during the same period in 2018, representing an increase in profit of RMB5.2 million.

First Nine Months 2019 Financial Highlights

• Net sales were RMB248.8 million (US$34.8 million), compared to RMB243.40 million, during the same period in 2018, representing an increase of RMB5.4 million or 2.2%.
• Sales of specialty films were RMB114.7 million (US$16.0 million) or 46.1% of total revenues as compared to RMB109.0 million or 44.8% in the same period of 2018.
• Overseas sales were RMB42.2 million (US$5.9 million) or 16.9% of total revenues, compared with RMB36.1 million or 14.8% of total revenues in the same period in 2018.  
• Gross profit was RMB52.6 million (US$7.4 million), representing a gross margin of 21.2%, as compared to a gross margin of 13.7% for the same period in 2018.

Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, "Benefiting from our differentiated product strategy and continuous R&D, we are pleased to continue to operate profitably for the third quarter. Sales of specialty films stayed dominant in wholesales and accounted for 51% of total sales during the quarter. Looking ahead, the BOPET industry remains competitive as a result of higher supply. Nevertheless, we will continue to innovate, tackle overseas markets and execute our differentiated product strategy to improve performance and capture opportunities."

Financial Results for the Three Months Ended September 30, 2019

Net sales during the third quarter ended September 30, 2019 were RMB79.6 million (US$11.1 million), compared to RMB86.9 million during the same period in 2018. The decrease of average sales price caused a decrease of RMB4.6 million and the sales volume decrease caused a decrease of RMB2.7 million.

In the third quarter of 2019, sales of specialty films were RMB40.6 million (US$5.7 million) or 51.0% of total revenues as compared to RMB45.3 million or 52.2% in the same period of 2018. The decrease in average sales price caused a decrease of RMB1.5 million and the decrease in the sales volume caused a decrease of RMB3.2 million.

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

Overseas sales were RMB11.6 million or US$1.6 million, or 14.6% of total revenues, compared with RMB8.5 million or 9.8% of total revenues in the third quarter of 2018. The decrease in average sales price caused a decrease of RMB0.8 million and the increase in sales volume resulted in an increase of RMB3.9 million.

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

Gross profit was RMB21.6 million (US$3.0 million) for the third quarter ended September 30, 2019, representing a gross margin rate of 27.1%, compared to gross profit of RMB17.1 million and a gross margin rate of 19.6% for the same period in 2018. Correspondingly, gross margin rate increased by 7.5 percentage point compared to the same period in 2018.

Operating expenses for the third quarter ended September 30, 2019 were RMB16.3 million (US$2.3 million), which was RMB1.5 million, or 8.4% lower than the same period in 2018. This decrease was mainly due to decreased expenses on research and development.

Net profit attributable to the Company during the third quarter ended September 30, 2019 was RMB3.4million (US$0.5 million), compared to net loss attributable to the Company of RMB1.8 million during the same period in 2018, representing an increase in profit of RMB5.2 million.

Financial Results for the Nine Months Ended September 30, 2019

Net sales during the nine-month period ended September 30, 2019 were RMB248.8 million (US$34.8 million), compared to RMB243.40 million, during the same period in 2018, representing an increase of RMB5.4 million or 2.2%, mainly due to the increase in sales prices in the first nine months of 2019.

In the nine-month period ended September 30, 2019, sales of specialty films were RMB114.7 million (US$16.0 million) or 46.1% of total revenues as compared to RMB109.0 million or 44.8% in the same period of 2018, which was an increase of RMB5.7 million, or 5.2% as compared to the same period in 2018. The increase of average sales price in the first nine months of 2019 caused an increase of RMB1.8 million and the increase in the sales volume caused an increase of RMB3.9 million.

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

Overseas sales during the nine months ended September 30, 2019 were RMB42.2 million or US$5.9 million or 16.9% of total revenues, compared to RMB36.1 million or 14.8% of total revenues in the same period in 2018. This was RMB6.1 million higher than the same period in 2018. The increase in sales volume resulted in an increase of RMB4.7 million and the increase of average sales price caused an increase of RMB1.4 million.

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

Gross profit was RMB52.6 million (US$7.4 million) for the first nine months ended September 30, 2019, representing a gross margin of 21.2%, compared to a gross margin of 13.7% for the same period in 2018. Correspondingly, gross margin increased by 7.5 percentage. Average product sales prices increased by 2.2% compared to the same period last year while the average cost of goods sold decreased by 6.6% compared to the same period last year. This resulted in an increase in gross profit.

Operating expenses for the nine months ended September 30, 2019 were RMB44.9 million (US$6.3 million), compared to RMB47.0 million in the same period in 2018, which was RMB2.1 million or 4.5% lower than the same period in 2018. This decrease was mainly due to decreased expenses on research and development.

Net profit attributable to the Company during the first nine-month period of 2019 was RMB1.0 million (US$0.1 million) compared to net loss attributable to the Company of RMB18.7 million during the same period in 2018, representing an increase of RMB19.7 million from the same period in 2018 due to the factors described above.

Cash, cash equivalent and restricted cash totaled RMB74.9 million or US$10.5 million as of September 30, 2019. Total shareholders' equity was RMB197.9 million or US$27.7 million.

As of September 30, 2019, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Wednesday, November 27, 2019, 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 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: 56850. The replay will be available until December 27, 2019, at 8:00 a.m. ET.

About Fuwei Films

Fuwei Films develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, also known as BOPET film. 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 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.:
Mr. Shiwei Yin
Investor Relations
Grayling
Phone: +1-646-284-9474
Email: [email protected]

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SOURCE Fuwei Films (Holdings) Co., Ltd.