October 27, 2020

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Fuwei Films Announces Its Unaudited Financial Results for the Second Quarter of 2020


-Teleconference to be Held on Friday, September 4, 2020 at 9:00 am ET-

BEIJING, Sept. 4, 2020 /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 second quarter of 2020 ended June 30, 2020.

Second Quarter 2020 Financial Highlights

  • Net sales during the second quarter ended June 30, 2020 were RMB82.9 million (US$11.7 million), compared to RMB88.1 million during the same period in 2019.
  • Sales of specialty films were RMB48.1 million (US$6.8 million) or 58.0% of our total revenues as compared to RMB42.0 million or 47.6% in the same period of 2019, which was an increase of RMB6.1 million, or 14.5% year-over-year.
  • Overseas sales were RMB7.5 million (US$1.1 million), or 9.1% of total revenues, compared with RMB14.3 million in the second quarter of 2019.
  • Gross profit was RMB34.4 million (US$4.9 million) for the second quarter ended June 30, 2020, representing a gross profit rate of 41.6%, as compared to a gross profit rate of 21.1% for the same period in 2019.
  • Net profit attributable to the Company was RMB14.1 million (US$2.0 million) while net profit attributable to the Company was RMB1.0 million during the same period in 2019.

First Six Months 2020 Financial Highlights

  • Net sales were RMB166.1 million (US$23.5 million), compared to RMB169.2 million in the same period in 2019.
  • Sales of specialty films were RMB88.0 million (US$12.5 million) or 53.0% of our total revenues as compared to RMB74.2 million or 43.8% in the same period of 2019, which was an increase of RMB13.8 million, or 18.6% year-over-year.
  • Overseas sales were RMB13.3 million or US$1.9 million, or 8.0% of total revenues.
  • Gross profit was RMB64.2 million (US$9.1 million), representing a gross margin rate of 38.7%, as compared to a gross margin rate of 18.3% for the same period in 2019.
  • Net profit attributable to the Company was RMB27.0 million (US$3.8 million) while net loss attributable to the Company was RMB2.4 million during the same period in 2019.

Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, “Despite the oversupply in the marketplace and the outbreak of COVID-19 pandemic which has caused significant and adverse effects on the global economy, we achieved positive trends in our mix of sales, especially sales of specialty films which accounted for 58% of our total revenues. In addition, we achieved net profit for five consecutive quarters. We believe these results benefit from our commitment to innovation and differentiated marketing strategy which have expanded the end-user applications of our films products. We will continue with these efforts and expect that they will enable the Company to capitalize on new opportunities despite challenging industry and economic conditions.”

Second Quarter 2020 Results

Net sales during the second quarter ended June 30, 2020 were RMB82.9 million (US$11.7 million), compared to RMB88.1 million during the same period in 2019. The decrease of average sales price caused a decrease of RMB3.6 million and lower sales volume caused a decrease of RMB1.6 million.

In the second quarter of 2020, sales of specialty films were RMB48.1 million (US$6.8 million) or 58.0% of our total revenues as compared to RMB42.0 million or 47.6% in the same period of 2019, which was an increase of RMB6.1 million, or 14.5% year-over-year. The increase of sales volume caused an increase of RMB8.9 million and the decrease in the average sales price caused a decrease of RMB2.8 million.

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

Three-Month Period
Ended
June 30, 2020

% of
Total

Three-Month Period
Ended
June 30, 2019

% of
Total

RMB

US$

RMB

Stamping and transfer film

25,885

3,665

31.3%

28,596

32.4%

Printing film

5,746

813

6.9%

8,512

9.7%

Metallization film

1,159

164

1.4%

1,938

2.2%

Specialty film

48,088

6,806

58.0%

41,958

47.6%

Base film for other
application

1,978

280

2.4%

7,113

8.1%

82,856

11,728

100.0%

88,117

100.0%

Overseas sales were RMB7.5 million or US$1.1 million, or 9.1% of total revenues, compared with RMB14.3 million or 16.3% of total revenues in the second quarter of 2019. The increase of average sales price caused an increase of RMB0.5 million and the decrease in sales volume resulted in a decrease of RMB7.3 million.

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

Three-Month Period
Ended
June 30, 2020

% of Total

Three-Month Period
Ended
June 30, 2019

% of Total

RMB

US$

RMB

Sales in China

75,334

10,663

90.9%

73,777

83.7%

Sales in other countries

7,522

1,065

9.1%

14,340

16.3%

82,856

11,728

100.0%

88,117

100.0%

Gross profit was RMB34.4 million (US$4.9 million) for the second quarter ended June 30, 2020, representing a gross profit rate of 41.6%, as compared to a gross profit rate of 21.1% for the same period in 2019. Correspondingly, gross profit rate increased by 20.5 percentage point compared to the same period in 2019. Our average product sales prices decreased by 4.2% compared to the same period last year while the average cost of goods sold decreased by 29.0% due to the decrease in raw materials cost. Consequently, it resulted in an increase in our gross profit.

Operating expenses for the second quarter ended June 30, 2020 were RMB18.7 million (US$2.7 million), as compared to RMB15.0 million for the same period in 2019. The increase was mainly due to the change of accounting estimate which caused the increase of accrual depreciation of the third production line.

Net profit attributable to the Company during the second quarter ended June 30, 2020 was RMB14.1 million (US$2.0 million) while net profit attributable to the Company was RMB1.0 million during the same period in 2019.

Financial Results for the Six Months Ended June 30, 2020

Net sales during the six-month period ended June 30, 2020 were RMB166.1 million (US$23.5 million), compared to RMB169.2 million in the same period in 2019. The increase in average sales price caused an increase of RMB0.7 million and the decrease in the sales volume caused a decrease of RMB3.8 million.

In the six-month period ended June 30, 2020, sales of specialty films were RMB88.0 million (US$12.5 million) or 53.0% of our total revenues as compared to RMB74.2 million or 43.8% in the same period of 2019, which was an increase of RMB13.8 million, or 18.6% year-over-year. The increase in sales volume caused an increase of RMB17.7 million and the decrease in the average sales price caused a decrease of RMB3.9 million.

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

Six-Month Period
Ended
June 30, 2020

% of
Total

Six-Month Period
Ended
June 30, 2019

% of
Total

RMB

US$

RMB

Stamping and transfer film

60,406

8,548

36.3%

60,123

35.6%

Printing film

11,591

1,641

7.0%

20,732

12.3%

Metallization film

2,661

377

1.6%

2,614

1.5%

Specialty film

87,965

12,451

53.0%

74,154

43.8%

Base film for other
application

3,466

491

2.1%

11,568

6.8%

166,089

23,508

100.0%

169,191

100.0%

Overseas sales during the six months ended June 30, 2020 were RMB13.3 million (US$1.9 million), or 8.0% of total revenues, compared with RMB30.6 million or 18.1% of total revenues in the same period in 2019. The decrease in sales volume resulted in a decrease of RMB18.2 million and was mainly due to the antidumping measures while higher average sales price caused an increase of RMB0.9 million.

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

Six-Month Period
Ended
June 30, 2020

% of Total

Six-Month Period
Ended
June 30, 2019

% of Total

RMB

US$

RMB

Sales in China

152,783

21,625

92.0%

138,631

81.9%

Sales in other countries

13,306

1,883

8.0%

30,560

18.1%

166,089

23,508

100.0%

169,191

100.0%

Our gross profit was RMB64.2 million (US$9.1 million) for the first six months ended June 30, 2020, representing a gross margin rate of 38.7%, as compared to a gross margin rate of 18.3% for the same period in 2019. Correspondingly, gross margin rate increased by 20.4 percentage points. Our average product sales prices increased by 0.4% compared to the same period last year while the average cost of goods sold decreased by 24.6%. Consequently, it resulted in an increase in our gross margin.

Operating expenses for the six months ended June 30, 2020 were RMB33.8 million (US$4.8 million), compared to RMB28.5 million in the same period in 2019. This increase was mainly due to the change of accounting estimate which caused the increase of accrual depreciation of the third production line.

Net income attributable to the Company during the first half of 2020 was RMB27.0 million (US$3.8 million) compared to net loss attributable to the Company of RMB2.4 million during the same period in 2019, representing an increase of RMB29.4 million from the same period in 2019 due to the factors described above.

Cash, cash equivalent and restricted cash totaled RMB81.3 million (US$11.5 million) as of June 30, 2020. Total shareholders’ equity was RMB235.2 million (US$33.3 million).

As of June 30, 2020, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Friday, September 4, 2020, at 9:00 a.m. ET / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-844-369-8770 in North America, or +1-862-298-0840 internationally, approximately 5 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: 36765. The replay will be available until September 18, 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 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 coronavirus (COVID-19) outbreak and the effects of government and other measures seeking to contain its spread, 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: fuweiIR@fuweifilms.com

In the U.S.:

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

Financial Tables to Follow

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

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(amounts in thousands except share and per share value)

(Unaudited)

June 30, 2020

December 31, 2019

RMB

US$

RMB

ASSETS

Current assets

Cash and cash equivalents

76,318

10,802

60,871

Restricted cash

5,000

708

25,500

Accounts and bills receivable, net

41,829

5,921

26,960

Inventories

26,107

3,695

23,584

Advance to suppliers

8,852

1,253

6,277

Prepayments and other receivables

1,156

164

1,058

Deferred tax assets – current

1,290

183

1,266

Total current assets

160,552

22,726

145,516

Property, plant and equipment, net

285,888

40,465

302,642

Construction in progress

999

141

Lease prepayments, net

15,485

2,192

15,762

Advance to suppliers – long term, net

1,542

218

1,542

Deferred tax assets – non current

439

62

509

Total assets

464,905

65,804

465,971

LIABILITIES AND EQUITY

Current liabilities

Short-term borrowings

65,000

9,200

65,000

Due to related parties

119,297

Accounts payables

20,711

2,931

19,532

Notes payable

10,000

1,415

41,000

Advance from customers

4,411

624

5,204

Accrued expenses and other payables

127,414

18,034

5,454

Total current liabilities

227,536

32,204

255,487

Deferred tax liabilities

2,163

306

2,290

Total liabilities

229,699

32,510

257,777

Equity

Shareholders’ equity

Registered capital (of US$0.519008 par value; 5,000,000 shares
authorized; 3,265,837 issued and outstanding)

13,323

1,886

13,323

Additional paid-in capital

311,907

44,148

311,907

Statutory reserve

37,441

5,299

37,441

Accumulated deficit

(128,305)

(18,160)

(155,317)

Cumulative translation adjustment

840

121

840

Total shareholders’ equity

235,206

33,294

208,194

Total equity

235,206

33,294

208,194

Total liabilities and equity

464,905

65,804

465,971

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019

(amounts in thousands except share and per share value)

(Unaudited)

The Three-Month Period Ended June 30,

The Six-Month Period Ended June 30,

2020

2019

2020

2019

RMB

US$

RMB

RMB

US$

RMB

Net sales

82,856

11,728

88,117

166,089

23,508

169,191

Cost of sales

48,421

6,854

69,488

101,895

14,422

138,158

Gross profit

34,435

4,874

18,629

64,194

9,086

31,033

Operating expenses

Selling expenses

3,372

477

3,537

7,458

1,056

6,501

Administrative expenses

15,368

2,175

11,453

26,323

3,726

22,030

Total operating
expenses

18,740

2,652

14,990

33,781

4,782

28,531

Operating income

15,695

2,222

3,639

30,413

4,304

2,502

Other income (expense)

– Interest income

567

80

202

857

121

416

– Interest expense

(2,241)

(317)

(2,244)

(4,457)

(631)

(4,435)

– Others income
(expense), net

49

7

(630)

118

17

(872)

Total other expenses

(1,625)

(230)

(2,672)

(3,482)

(493)

(4,891)

Income(loss) before
provision for income
taxes

14,070

1,992

967

26,931

3,811

(2,389)

Income tax benefit
(expense)

(13)

(2)

(16)

81

11

(33)

Net income (loss)

14,057

1,990

951

27,012

3,822

(2,422)

Net income (loss)
attributable to
non-controlling interests

Net income (loss)
attributable to the
Company

14,057

1,990

951

27,012

3,822

(2,422)

Other comprehensive
income (loss)

– Foreign currency
translation adjustments
attributable to
non-controlling interest

– Foreign currency
translation adjustments
attributable to the
Company

(1)

Comprehensive loss
attributable to
non-controlling interest

Comprehensive income(loss )
attributable to the
Company

14,057

1,990

951

27,012

3,822

(2,423)

Earnings (loss) per
share,
Basic and diluted

4.30

0.61

0.29

8.27

1.17

(0.74)

Weighted average
number ordinary shares,
Basic and diluted

3,265,837

3,265,837

3,265,837

3,265,837

3,265,837

3,265,837

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019

(amounts in thousands except share and per share value)

(Unaudited)

The Six-Month Period Ended June 30,

2020

2019

RMB

US$

RMB

Cash flow from operating activities

Net income (loss)

27,012

3,822

(2,422)

Adjustments to reconcile net loss to net cash

used in operating activities

– Depreciation of property, plant and equipment

17,986

2,546

23,892

– Amortization of intangible assets

267

38

267

– Deferred income taxes

(81)

(11)

33

– Bad debt recovery

160

23

(903)

-Inventory provision

724

Changes in operating assets and liabilities

– Accounts and bills receivable

(15,026)

(2,127)

(222)

– Inventories

(2,523)

(357)

(323)

– Advance to suppliers

(2,497)

(353)

794

– Prepaid expenses and other current assets

(87)

(12)

(116)

– Accounts payable

1,176

168

1,692

– Accrued expenses and other payables

210

30

319

– Advance from customers

(793)

(112)

2,203

– Tax payable

65

9

(212)

Net cash provided by (used in) operating activities

25,869

3,664

25,726

Cash flow from investing activities

Purchases of property, plant and equipment

(1,232)

(174)

(3,574)

Restricted cash related to trade finance

Advanced to suppliers – non current

Amount change in construction in progress

(999)

(141)

83

Net cash provided by (used in) investing activities

(2,231)

(315)

(3,491)

Cash flow from financing activities

Principal payments of bank loans

Proceeds from (payment to) short-term bank loans

Proceeds from (payment to) related party

2,309

327

2,296

Change in notes payable

(31,000)

(4,388)

1,980

Net cash (used in) provided by financing activities

(28,691)

(4,061)

4,276

Effect of foreign exchange rate changes

(185)

Net increase in cash and cash equivalent

(5,053)

(897)

26,511

Cash and cash equivalent

At beginning of period

86,371

12,407

46,908

At end of period

81,318

11,510

73,419

SUPPLEMENTARY DISCLOSURE:

Interest paid

4,457

631

4,435

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:

1,010

143

1,010

Related Links :

http://www.fuweifilms.com


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