Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2020
-Teleconference to be held on November 24, 2020 at 8:00 am ET-
BEIJING, Nov. 23, 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 third quarter of 2020 ended September 30, 2020.
Third Quarter 2020 Financial Highlights
- Net sales were RMB84.3 million (US$12.4 million), compared to RMB79.6 million during the same period in 2019.
- Sales of specialty films were RMB54.4 million (US$8.0 million) or 64.6% of total revenues as compared to RMB40.6 million or 51.0% in the same period of 2019.
- Overseas sales were RMB7.8 million or US$1.1 million, or 9.2% of total revenues, compared with RMB11.6 million or 14.6% of total revenues in the third quarter of 2019.
- Gross profit was RMB36.0 million (US$5.3 million), representing a gross margin rate of 42.7%, as compared to gross profit of RMB21.6 million and a gross margin rate of 27.1% for the same period in 2019.
- Net profit attributable to the Company was RMB13.5million (US$2.0 million) compared to net profit attributable to the Company of RMB3.4 million during the same period in 2019, representing an increase in profit of RMB10.1 million.
First Nine Months of 2020 Financial Highlights
- Net sales were RMB250.4 million (US$36.9 million), compared to RMB248.8 million during the same period in 2019.
- Sales of specialty films were RMB142.4 million (US$21.0 million) or 56.9% of total revenues as compared to RMB114.7 million or 46.1% in the same period of 2019.
- Overseas sales were RMB21.1 million (US$3.1 million), or 8.4% of total revenues, compared with RMB42.2 million or 16.9% of total revenues in the same period in 2019.
- Gross profit was RMB100.2 million (US$14.8 million), representing a gross margin of 40.0%, compared with gross profit of RMB52.6 million or a gross margin of 21.2% in the same period of 2019.
- Net profit attributable to the Company was RMB40.5 million (US$6.0 million) compared to net profit attributable to the Company of RMB1.0 million during the same period in 2019, representing an increase of RMB39.5 million from the same period in 2019.
Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, "Despite the challenging industry environment and the outbreak of the COVID-19 pandemic which has caused significant and adverse effects on the global economy, our orders remain solid and sales are relatively stable. Sales of specialty films increased continuously which accounted for 64.6% of our total revenues during the quarter. In addition, we maintained profitability for six 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."
Third Quarter 2020 Results
Net sales during the third quarter ended September 30, 2020 were RMB84.3 million (US$12.4 million), compared to RMB79.6 million during the same period in 2019, representing a year-over-year increase of RMB4.7 million or 5.9%. The decrease of average sales price caused a decrease of RMB3.2 million and the sales volume increase caused an increase of RMB7.9 million.
In the third quarter of 2020, sales of specialty films were RMB54.4 million (US$8.0 million) or 64.6% of total revenues as compared to RMB40.6 million or 51.0% in the same period of 2019, representing a year-over-year increase of RMB13.8 million, or 34.0% as compared to the same period in 2019. The decrease in average sales price caused a decrease of RMB2.0 million and the increase in the sales volume caused an increase of RMB15.8 million.
The following is a breakdown of commodity and specialty film sales (amounts in thousands):
Three-Month Period Ended |
% of Total |
Three-Month Period |
% of Total |
|||
RMB |
US$ |
RMB |
||||
Stamping and transfer film |
19,860 |
2,926 |
23.6% |
26,552 |
33.3% |
|
Printing film |
6,261 |
922 |
7.4% |
7,881 |
9.9% |
|
Metallization film |
451 |
66 |
0.5% |
1,197 |
1.5% |
|
Specialty film |
54,435 |
8,017 |
64.6% |
40,559 |
51.0% |
|
Base film for other application |
3,309 |
487 |
3.9% |
3,397 |
4.3% |
|
84,316 |
12,418 |
100.0% |
79,586 |
100.0% |
||
Overseas sales were RMB7.8 million or US$1.1 million, or 9.2% of total revenues, compared with RMB11.6 million or 14.6% of total revenues in the third quarter of 2019. The decrease in average sales price caused a decrease of RMB0.6 million and the decrease in sales volume resulted in a decrease of RMB3.2 million.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):
Three-Month Period Ended |
% of Total |
Three-Month Period Ended |
% of Total |
|||
RMB |
US$ |
RMB |
||||
Sales in China |
76,518 |
11,270 |
90.8% |
67,993 |
85.4% |
|
Sales in other countries |
7,798 |
1,148 |
9.2% |
11,593 |
14.6% |
|
84,316 |
12,418 |
100.0% |
79,586 |
100.0% |
||
Gross profit was RMB36.0 million (US$5.3 million) for the third quarter ended September 30, 2020, representing a gross margin rate of 42.7%, as compared to gross profit of RMB21.6 million and a gross margin rate of 27.1% for the same period in 2019. Correspondingly, gross margin rate increased by 15.6 percentage point compared to the same period in 2019.
Operating expenses for the third quarter ended September 30, 2020 were RMB20.9 million (US$3.1 million), which was RMB4.6 million, or 28.2% higher than 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 profit attributable to the Company during the third quarter ended September 30, 2020 was RMB13.5 million (US$2.0 million) compared to net profit attributable to the Company of RMB3.4 million during the same period in 2019, representing an increase in profit of RMB10.1 million.
Financial Results for the Nine Months Ended September 30, 2020
Net sales during the nine-month period ended September 30, 2020 were RMB250.4 million (US$36.9 million), compared to RMB248.8 million, during the same period in 2019, representing an increase of RMB1.6 million or 0.6%, mainly due to the increase in sales volume.
In the nine-month period ended September 30, 2020, sales of specialty films were RMB142.4 million (US$21.0 million) or 56.9% of total revenues as compared to RMB114.7 million or 46.1% in the same period of 2019, which was an increase of RMB27.7 million, or 24.1% as compared to the same period in 2019. The decrease of average sales price caused a decrease of RMB6.0 million and the increase in the sales volume caused an increase of RMB33.7 million.
The following is a breakdown of commodity and specialty film sales (amounts in thousands):
Nine-Month Period Ended |
% of Total |
Nine-Month Period |
% of Total |
|||
RMB |
US$ |
RMB |
||||
Stamping and transfer film |
80,267 |
11,823 |
32.1% |
86,675 |
34.9% |
|
Printing film |
17,851 |
2,629 |
7.1% |
28,613 |
11.5% |
|
Metallization film |
3,112 |
458 |
1.2% |
3,811 |
1.5% |
|
Specialty film |
142,400 |
20,973 |
56.9% |
114,713 |
46.1% |
|
Base film for other applications |
6,775 |
998 |
2.7% |
14,965 |
6.0% |
|
250,405 |
36,881 |
100.0% |
248,777 |
100.0% |
||
Overseas sales during the nine months ended September 30, 2020 were RMB21.1 million (US$3.1 million), or 8.4% of total revenues, compared with RMB42.2 million or 16.9% of total revenues in the same period in 2019. This was RMB21.1 million lower than the same period in 2019. The decrease in sales volume resulted in a decrease of RMB21.6 million and the increase of average sales price caused an increase of RMB0.5 million.
The following is a breakdown of PRC domestic and overseas sales (amounts in thousands):
Nine-Month Period Ended |
% of Total |
Nine-Month Period Ended |
% of Total |
|||
RMB |
US$ |
RMB |
||||
Sales in China |
229,301 |
33,772 |
91.6% |
206,625 |
83.1% |
|
Sales in other countries |
21,104 |
3,109 |
8.4% |
42,152 |
16.9% |
|
250,405 |
36,881 |
100.0% |
248,777 |
100.0% |
||
Gross profit was RMB100.2 million (US$14.8 million) for the first nine months ended September 30, 2020, representing a gross margin of 40.0%, as compared to a gross margin of 21.2% for the same period in 2019. Correspondingly, gross margin increased by 18.8 percentage. Average product sales prices decreased by 0.9% compared to the same period last year while the average cost of goods sold decreased by 24.7% compared to the same period last year.
Operating expenses for the nine months ended September 30, 2020 were RMB54.7 million (US$8.1 million), compared to RMB44.9 million in the same period in 2019, which was RMB9.8 million or 21.8% higher than 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 profit attributable to the Company during the first nine-month period of 2020 was RMB40.5 million (US$6.0 million) compared to net profit attributable to the Company of RMB1.0 million during the same period in 2019, representing an increase of RMB39.5 million from the same period in 2019 due to the factors described above.
Cash, cash equivalent and restricted cash totaled RMB88.8 million (US$13.1 million) as of September 30, 2020. Total shareholders' equity was RMB248.7 million (US$36.6 million).
As of September 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 Tuesday, November 24, 2020, 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 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: 38820. The replay will be available until December 8, 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: [email protected]
In the U.S.:
Shiwei Yin
Investor Relations
Grayling
Phone: +1-646-284-9474
Email: [email protected]
Financial Tables to Follow
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 |
|||||
(amounts in thousands except share and per share value) |
|||||
(Unaudited) |
|||||
September 30, 2020 |
December 31, 2019 |
||||
RMB |
US$ |
RMB |
|||
ASSETS |
|||||
Current assets |
|||||
Cash and cash equivalents |
86,310 |
12,712 |
60,871 |
||
Restricted cash |
2,500 |
368 |
25,500 |
||
Accounts and bills receivable, net |
23,403 |
3,447 |
26,960 |
||
Inventories |
27,294 |
4,020 |
23,584 |
||
Advance to suppliers |
7,981 |
1,175 |
6,277 |
||
Prepayments and other receivables |
1,254 |
185 |
1,058 |
||
Deferred tax assets – current |
1,286 |
189 |
1,266 |
||
Total current assets |
150,028 |
22,096 |
145,516 |
||
Property, plant and equipment, net |
278,210 |
40,976 |
302,642 |
||
Construction in progress |
1,069 |
157 |
- |
||
Lease prepayments, net |
15,351 |
2,261 |
15,762 |
||
Advance to suppliers - long term, net |
1,542 |
227 |
1,542 |
||
Deferred tax assets - non current |
403 |
59 |
509 |
||
Total assets |
446,603 |
65,776 |
465,971 |
||
LIABILITIES AND EQUITY |
|||||
Current liabilities |
|||||
Short-term borrowings |
65,000 |
9,573 |
65,000 |
||
Due to related parties |
92,846 |
13,675 |
119,297 |
||
Accounts payables |
23,026 |
3,391 |
19,532 |
||
Notes payable |
3,400 |
501 |
41,000 |
||
Advance from customers |
5,127 |
755 |
5,204 |
||
Accrued expenses and other payables |
6,491 |
956 |
5,454 |
||
Total current liabilities |
195,890 |
28,851 |
255,487 |
||
Deferred tax liabilities |
2,024 |
298 |
2,290 |
||
Total liabilities |
197,914 |
29,149 |
257,777 |
||
Equity |
|||||
Shareholders' equity |
|||||
Registered capital (of US$0.519008 par value; |
13,323 |
1,962 |
13,323 |
||
Additional paid-in capital |
311,907 |
45,939 |
311,907 |
||
Statutory reserve |
37,441 |
5,514 |
37,441 |
||
Accumulated deficit |
(114,822) |
(16,911) |
(155,317) |
||
Cumulative translation adjustment |
840 |
123 |
840 |
||
Total equity |
248,689 |
36,627 |
208,194 |
||
Total liabilities and equity |
446,603 |
65,776 |
465,971 |
||
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES |
||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
||||||||||
FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 |
||||||||||
(amounts in thousands except share and per share value) |
||||||||||
(Unaudited) |
||||||||||
The Three-Month Period Ended |
The Nine-Month Period Ended |
|||||||||
2020 |
2019 |
2020 |
2019 |
|||||||
RMB |
US$ |
RMB |
RMB |
US$ |
RMB |
|||||
Net sales |
84,316 |
12,418 |
79,586 |
250,405 |
36,881 |
248,777 |
||||
Cost of sales |
48,276 |
7,110 |
57,996 |
150,171 |
22,118 |
196,154 |
||||
Gross profit |
36,040 |
5,308 |
21,590 |
100,234 |
14,763 |
52,623 |
||||
Operating expenses |
||||||||||
Selling expenses |
4,200 |
619 |
3,236 |
11,658 |
1,717 |
9,737 |
||||
Administrative expenses |
16,735 |
2,465 |
13,083 |
43,058 |
6,342 |
35,113 |
||||
Total operating expenses |
20,935 |
3,084 |
16,319 |
54,716 |
8,059 |
44,850 |
||||
Operating income |
15,105 |
2,224 |
5,271 |
45,518 |
6,704 |
7,773 |
||||
Other income (expense) |
||||||||||
- Interest income |
637 |
94 |
255 |
1,494 |
220 |
671 |
||||
- Interest expense |
(2,240) |
(330) |
(2,240) |
(6,697) |
(986) |
(6,675) |
||||
- Others income (expense), net |
(118) |
(17) |
80 |
- |
- |
(792) |
||||
Total other expense |
(1,721) |
(253) |
(1,905) |
(5,203) |
(766) |
(6,796) |
||||
Income before provision for income taxes |
13,384 |
1,971 |
3,366 |
40,315 |
5,938 |
977 |
||||
Income tax benefit |
99 |
15 |
77 |
180 |
27 |
44 |
||||
Net income |
13,483 |
1,986 |
3,443 |
40,495 |
5,965 |
1,021 |
||||
Other comprehensive loss |
||||||||||
- Foreign currency translation |
- |
- |
1 |
- |
- |
- |
||||
Comprehensive income |
13,483 |
1,986 |
3,444 |
40,495 |
5,965 |
1,021 |
||||
Income per share, |
4.13 |
0.61 |
1.05 |
12.40 |
1.83 |
0.31 |
||||
Weighted average number ordinary |
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 NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 |
|||||
(amounts in thousands except share and per share value) |
|||||
(Unaudited) |
|||||
The Nine-Month Period Ended September 30, |
|||||
2020 |
2019 |
||||
RMB |
US$ |
RMB |
|||
Cash flow from operating activities |
|||||
Net income |
40,495 |
5,965 |
1,021 |
||
Adjustments to reconcile net loss to net cash used in operating |
|||||
- Depreciation of property, plant and equipment |
29,086 |
4,284 |
33,957 |
||
- Amortization of intangible assets |
401 |
59 |
400 |
||
- Deferred income taxes |
(180) |
(27) |
(44) |
||
- Bad debt (recovery) expense |
131 |
19 |
(897) |
||
-Inventory provision |
- |
- |
724 |
||
Changes in operating assets and liabilities |
|||||
- Accounts and bills receivable |
3426 |
505 |
(72) |
||
- Inventories |
(3,710) |
(546) |
1,815 |
||
- Advance to suppliers |
(1,705) |
(251) |
(4,833) |
||
- Prepaid expenses and other current assets |
(186) |
(27) |
(155) |
||
- Accounts payable |
3,494 |
515 |
393 |
||
- Accrued expenses and other payables |
313 |
46 |
501 |
||
- Advance from customers |
(77) |
(11) |
2,447 |
||
- Tax payable |
724 |
107 |
368 |
||
Net cash provided by (used in) operating activities |
72,212 |
10,638 |
35,625 |
||
Cash flow from investing activities |
|||||
Purchases of property, plant and equipment |
(4,653) |
(685) |
(12,889) |
||
Restricted cash related to trade finance |
- |
- |
- |
||
Advance to suppliers - non current |
- |
- |
- |
||
Amount change in construction in progress |
(1,069) |
(157) |
366 |
||
Net cash used in investing activities |
(5,722) |
(842) |
(12,523) |
||
Cash flow from financing activities |
|||||
Principal payments of bank loans |
- |
- |
- |
||
Proceeds from short-term bank loans |
- |
- |
50 |
||
Proceeds from related party |
(26,451) |
(3,896) |
3,457 |
||
Change in notes payable |
(37,600) |
(5,538) |
1,400 |
||
Net cash provided by financing activities |
(64,051) |
(9,434) |
4,907 |
||
Effect of foreign exchange rate changes |
- |
311 |
- |
||
Net increase in cash and cash equivalent |
2,439 |
673 |
28,009 |
||
Cash and cash equivalent |
|||||
At beginning of period/year |
86,371 |
12,407 |
46,908 |
||
At end of period/year |
88,810 |
13,080 |
74,917 |
||
SUPPLEMENTARY DISCLOSURE: |
|||||
Interest paid |
6,697 |
986 |
6,675 |
||
Income tax paid |
- |
- |
- |
||
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: |
|||||
Account payable for plant and equipment: |
1,010 |
149 |
1,062 |
||
SOURCE Fuwei Films (Holdings) Co., Ltd.
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