EX-99.1 4 tm2036531d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

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, November 23, 2020 - 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

 

lNet sales were RMB84.3 million (US$12.4 million), compared to RMB79.6 million during the same period in 2019.

 

lSales 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.

 

lOverseas 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.

 

lGross 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.

 

lNet 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

 

lNet sales were RMB250.4 million (US$36.9 million), compared to RMB248.8 million during the same period in 2019.

 

lSales 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.

 

lOverseas 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.

 

lGross 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.

 

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lNet 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
September 30, 2020		   % of Total   Three-Month Period Ended
September 30, 2019		   % 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%

 

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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
September 30, 2020		   % of Total   Three-Month Period Ended
September 30, 2019		   % 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.

 

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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
September 30, 2020		   % of Total   Nine-Month Period Ended
September 30, 2019		   % 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
September 30, 2020		   % of Total   Nine-Month Period Ended
September 30, 2019		   % 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.

 

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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.

 

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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

 

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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; 5,000,000 shares authorized; 3,265,837 issued and outstanding)   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 

 

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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
September 30,		   The Nine-Month Period Ended
September 30,		 
   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 adjustments   -    -    1    -    -    - 
                               
Comprehensive income   13,483    1,986    3,444    40,495    5,965    1,021 
                               
Income per share,
Basic and diluted		   4.13    0.61    1.05    12.40    1.83    0.31 
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 

 

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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 activities               
- 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 

 

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