Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2022

Rhea-AI Summary

Fuwei Films (Nasdaq: FFHL) reported its Q1 2022 financial results, showing a modest net sales increase to RMB103.1 million (US$16.3 million), up by 1.5% year-over-year. Specialty films accounted for 69.8% of total revenue, reaching RMB71.9 million (US$11.3 million). However, gross profit fell to RMB30.2 million (US$4.8 million), with a gross margin decrease to 29.3% due to a 21.7% rise in cost of goods sold. Net income dropped to RMB17.1 million (US$2.7 million), down from RMB31.4 million in Q1 2021, indicating challenges amid rising costs and increased operating expenses.

Positive

• Net sales increased to RMB103.1 million, up 1.5% year-over-year.
• Sales of specialty films rose to RMB71.9 million, accounting for 69.8% of total revenue.

Negative

• Gross profit decreased to RMB30.2 million, down from RMB42.5 million in Q1 2021.
• Gross margin fell to 29.3%, compared to 41.8% in the same period last year.
• Net income attributable to the Company dropped to RMB17.1 million from RMB31.4 million.

BEIJING, June 24, 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 unaudited financial results for the first quarter of 2022 ended March 31, 2022. 

First quarter highlights

• Net sales were RMB103.1 million (US$16.3 million), compared to RMB101.6 million, during the same period in 2021, representing an increase of RMB1.5 million, or 1.5% year-over-year
• Sales of specialty films were RMB71.9 million (US$11.3 million), equivalent to 69.8% of our total revenues as compared to RMB65.0 million or 63.9% in the same period of 2021
• Gross profit was RMB30.2 million (US$4.8 million), representing a gross margin of 29.3%
• Net income attributable to the Company was RMB17.1 million (US$2.7 million)

Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, "Despite the oversupply in the marketplace and the ongoing coronavirus pandemic, we achieved positive trends in overall sales, especially sales of specialty films, including a base film for dry film, which accounted for 69.8% of our total revenues. The base film is a high value-added and differentiated product, which is used to produce dry films that are applied to printed circuit boards. The sales increase of base film for dry films demonstrates that our customers well-recognize the quality of our products. We believe the order growth also helps improve the Company's financial performance. For the future, we remain committed to innovation and differentiated marketing strategy while expanding the end-user applications of our film products. We will continue these efforts and expect them to enable the Company to capitalize on new opportunities despite challenging industry and economic conditions." 

First Quarter 2022 Results

Net sales during the first quarter ended March 31, 2022, were RMB103.1 million (US$16.3 million), compared to RMB101.6 million, during the same period in 2021, representing an increase of RMB1.5 million, or 1.5% on an annual base. The increase in sales volume accounted for an increase of RMB1.4 million, and a higher sales price resulted in a RMB0.1 million increase.

In the first quarter of 2022, sales of specialty films were RMB71.9 million (US$11.3 million), equivalent to 69.8% of our total revenues compared to RMB65.0 million or 63.9% in the same period of 2021. The increase was mainly due to higher sales volume.

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

	Three-Month Period Ended March 31, 2022		% of Total	Three-Month Period Ended March 31, 2021	% of Total
	RMB	US$		RMB
Stamping and transfer film	22,110	3,489	21.4 %	25,350	25.0 %
Printing film	4,477	706	4.3 %	5,482	5.4 %
Metallization film	1,421	224	1.4 %	1,643	1.6 %
Specialty film	71,947	11,349	69.8 %	64,963	63.9 %
Base film for other applications	3,178	501	3.1 %	4,186	4.1 %
	103,133	16,269	100.0 %	101,624	100.0 %

 

Overseas sales were RMB10.2 million or US$1.6 million, representing 9.9% of total revenues, compared with RMB9.0 million or 8.9% of total revenues in the first quarter of 2021, an increase of RMB1.2 million or 13.3%. The growth in sales volume accounted for an increase of RMB0.3 million, while a higher sales price resulted in an increase of RMB0.9 million.

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

		Three-Month Period Ended March 31, 2022		% of Total	Three-Month Period Ended March 31, 2021	% of Total
		RMB	US$		RMB
Sales in China		92,922	14,658	90.1 %	92,596	91.1 %
Sales in other countries		10,211	1,611	9.9 %	9,028	8.9 %
		103,133	16,269	100.0 %	101,624	100.0 %

 

Our gross profit was RMB30.2 million (US$4.8 million) for the first quarter ended March 31, 2022, representing a gross margin of 29.3%, compared to a gross profit of RMB42.5 million and gross margin of 41.8% for the same period of 2021. The increase in the average cost of goods sold during the first quarter ended March 31, 2022, explained the decrease in our gross profit during the period. For the quarter, our average product sales prices increased by 0.1%, while our average cost of goods sold rose 21.7% compared to the same period in 2021.

Operating expenses for the first quarter ended March 31, 2022, were RMB13.7 million (US$2.2 million), 30.5%, or RMB3.2 million above those in the same period of 2021. This increase was mainly due to higher salaries and employees' welfare, and expenditure on R&D.

Net income attributable to the Company during the first quarter ended March 31, 2022, was RMB17.1 million (US$2.7 million), compared to net income attributable to the Company of RMB31.4 million during the same period in 2021.

Basic and diluted net earnings per share was RMB5.24 (US$0.83) and RMB9.60 for the three-month period ended March 31, 2022, and 2021, respectively.

Total shareholders' equity was RMB334.1 million or US$52.7 million as of March 31, 2022, compared with RMB317.0 million as of December 31, 2021.

As of March 31, 2022, the Company had 3,265,837 basic and diluted ordinary shares outstanding.

About Fuwei Films

Fuwei Films conducts its business through its wholly-owned subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Shandong Fuwei"). Shandong Fuwei 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 is 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 negative impacts of the determination of the U.S. Securities and Exchange Commission that the Public Company Accounting Oversight Board ("PCAOB") is currently unable to inspect our auditor in relation to their audit work and the potential that our ordinary shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act ("HFCAA") in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or 2023 if proposed changes to the law are enacted, 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, potential delisting of our ordinary shares under the Holding Foreign Company Affordable Act if the US Public Company Accounting Oversight Board is unable to inspect our auditors located in China, 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 the information contained in the forward-looking statements as a result of the risk factors.

 

 

Financial Tables to Follow

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2022, AND DECEMBER 31, 2021
(amounts in thousands except share and per share value)
(Unaudited)
		March 31, 2022			December 31, 2021
		RMB	US$		RMB
ASSETS
Current assets
Cash and cash equivalents		261,247	41,211		250,608
Restricted cash		19,294	3,044		28,294
Accounts and bills receivable, net		28,430	4,485		29,225
Inventories		37,462	5,909		35,456
Advance to suppliers		9,275	1,463		7,933
Prepayments and other receivables		1,243	196		1,199
Deferred tax assets - current		1,144	180		1,144
Total current assets		358,095	56,488		353,859
Plant, properties and equipment, net		104,173	16,433		106,928
Construction in progress		299	47		-
Lease prepayments, net		14,551	2,295		14,685
Deferred tax assets – non-current		192	30		227
Total assets		477,310	75,293		475,699
Current liabilities
Short-term borrowings		65,000	10,253		65,000
Accounts payables		27,267	4,301		22,616
Notes payable		38,588	6,087		50,126
Advance from customers		4,172	658		7,672
		6,387	1,008		11,479
Total current liabilities		141,414	22,307		156,893
Deferred tax liabilities		1,772	280		1,789
Total liabilities		143,186	22,587		158,682
Equity
Shareholders' equity
Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding)		13,323	2,102		13,323
Additional paid-in capital		311,907	49,202		311,907
Statutory reserve		37,441	5,906		37,441
Accumulated deficit		(29,387)	(4,636)		(46,494)
Cumulative translation adjustment		840	132		840
Total shareholders' equity		334,124	52,706		317,017
Total equity		334,124	52,706		317,017
Total liabilities and equity		477,310	75,293		475,699

 

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021
(amounts in thousands except share and per share value)
(Unaudited)
		The Three-Month Period Ended March 31,
		2022			2021
		RMB	US$		RMB
Net sales		103,133	16,269		101,624
Cost of sales		72,963	11,510		59,174
Gross Profit		30,170	4,759		42,450
Operating expenses
Selling expenses		5,141	811		4,114
Administrative expenses		8,575	1,353		6,355
Total operating expenses		13,716	2,164		10,469
Operating income		16,454	2,595		31,981
Other income (expense)
- Interest income		1,860	293		856
- Interest expense		(1,058)	(167)		(1,575)
- Other income (expense), net		(131)	(21)		122
Total other expense		671	105		(597)
Income before provision for income taxes		17,125	2,700		31,384
Income tax benefit (expense)		(18)	(3)		(19)
Net income		17,107	2,697		31,365
Net loss attributable to non-controlling interests		-	-		-
Net income attributable to the Company		17,107	2,697		31,365
Other comprehensive income
- Foreign currency translation adjustments attributable to non-controlling interest		-	-		-
- Foreign currency translation adjustments attributable to the Company		-	-		-
Comprehensive loss attributable to non-controlling interest		-	-		-
Comprehensive income attributable to the Company		17,107	2,697		31,365
Earnings per share, Basic and diluted		5.24	0.83		9.60
Weighted average number of ordinary shares, Basic and diluted		3,265,837	3,265,837		3,265,837

 

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021
(amounts in thousands except share and per share value)
(Unaudited)
			The Three-Month Period Ended March 31,
			2022			2021
			RMB	US$		RMB
Cash flow from operating activities
Net income			17,107	2,697		31,365
Adjustments to reconcile net loss to net cash
used in operating activities
- Depreciation of property, plant, and equipment			3,263	515		3,162
- Amortization of intangible assets			133	21		134
- Deferred income taxes			18	3		19
- Bad debt expense			(1)	-		(2)
-Inventory provision			-	-		-
Changes in operating assets and liabilities
- Accounts and bills receivable			796	126		(12,934)
- Inventories			(2,006)	(316)		3,209
- Advance to suppliers			(1,342)	(212)		(5,049)
- Prepaid expenses and other current assets			(44)	(7)		(69)
- Accounts payable			4,650	734		(5,542)
- Accrued expenses and other payables			(5,646)	(892)		(21,259)
- Advance from customers			(3,500)	(552)		11,607
- Tax payable			556	88		177
Net cash provided by operating activities			13,984	2,205		4,818
Cash flow from investing activities
Purchases of property, plant and equipment			(508)	(80)		(734)
Amount change in construction in progress			(299)	(47)		-
Advanced to suppliers – non-current			-	-		616
Proceeds from sale of property, plant and equipment			-	-		118,208
Net cash provided by investing activities			(807)	(127)		118,090
Cash flow from financing activities
Proceeds from related party			-	-		(23,052)
Payment of capital lease obligation			-	-		-
Change in notes payable			(11,538)	(1,820)		10,000
Net cash used in financing activities			(11,538)	(1,820)		(13,052)
Effect of foreign exchange rate changes			-	231		-
Net decrease in cash and cash equivalent			1,639	489		109,856
Cash and cash equivalent
At beginning of period/year			278,902	43,766		120,923
At end of period/year			280,541	44,255		230,779
SUPPLEMENTARY DISCLOSURE:
Interest paid			1,058	167		1,575
Income tax paid			-	-		-
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:
Account payable for plant and equipment:		1,010		159		1,010

 

 

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SOURCE Fuwei Films

FAQ

What were Fuwei Films' net sales for Q1 2022?

Fuwei Films reported net sales of RMB103.1 million (US$16.3 million) for Q1 2022.

How much did specialty films contribute to Fuwei Films' revenue in Q1 2022?

Specialty films contributed RMB71.9 million (US$11.3 million), or 69.8% of total revenue.

What was the gross profit and margin for Fuwei Films in Q1 2022?

The gross profit for Q1 2022 was RMB30.2 million (US$4.8 million), with a gross margin of 29.3%.

How much did net income decline for Fuwei Films in Q1 2022?

Net income attributable to Fuwei Films in Q1 2022 was RMB17.1 million, a decrease from RMB31.4 million in Q1 2021.

What were the operating expenses for Fuwei Films in Q1 2022?

Operating expenses were RMB13.7 million (US$2.2 million), an increase of 30.5% from the same period in 2021.