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

Rhea-AI Summary

Fuwei Films (FFHL) reported Q2 2022 net sales of RMB88.7 million (US$13.2 million), an 11.8% decline year-over-year. Specialty films drove 73.1% of total revenue, totaling RMB64.9 million (US$9.7 million), down 5.9%. Gross profit was RMB24.9 million (28.1% margin), significantly lower than the 39.6% margin in Q2 2021. For H1 2022, net sales reached RMB191.9 million (US$28.6 million), down 5.1% from 2021. Net income dropped to RMB30.8 million (US$4.6 million) from RMB51.2 million in 2021. The company attributes declines to lower sales volume and average prices but remains optimistic about specialty films.

Positive

• Specialty films accounted for 73.1% of total revenue, indicating strong demand.
• Net profit margin for specialty films remained strong at 28.1%.

Negative

• Net sales decreased by 11.8% to RMB88.7 million compared to Q2 2021.
• Gross profit margin declined to 28.1% from 39.6% year-over-year.
• Net income dropped significantly by RMB20.4 million, from RMB51.2 million in H1 2021.

BEIJING, Sept. 29, 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 second quarter of 2022 ended June 30, 2022. 

Second quarter highlights

• Net sales were RMB88.7 million (US$13.2 million)
• Sales of specialty films were RMB64.9 million (US$9.7 million), or 73.1% of total revenues
• Gross profit was RMB24.9 million (US$3.7 million), representing a gross profit margin of 28.1%
• Net profit attributable to the Company was RMB13.7 million (US$2.0 million)

 

First Six Months 2022 Financial Highlights

• Net sales were RMB191.9 million (US$28.6 million)
• Sales of specialty films totaled RMB136.8 million (US$20.4 million), or 71.3% of total revenues
• Overseas sales were RMB19.6 million (US$2.9 million), equivalent to 10.2% of total revenues
• Our gross profit was RMB55.1 million (US$8.2 million), representing a gross profit margin of 28.7%
• Net income attributable to the Company amounted to RMB30.8 million (US$4.6 million)

 

Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, "We saw positive overall sales trends, particularly in specialty films, such as a base film for dry film, which accounted for 73.1% of total revenue. The increase in base film sales demonstrates that our customers value the high quality of our products, and we believe it has helped the company's financial performance. At Fuwei Films, we prioritize innovation and utilize a distinct marketing approach while expanding future end-user markets for our film goods. Through these efforts, we anticipate that the Company will continue capitalizing on new opportunities despite difficult market and economic conditions."

Second Quarter 2022 Results

Net sales during the second quarter ended June 30, 2022, were RMB88.7 million (US$13.2 million), compared to RMB100.6 million during the same period in 2021, representing a year-over-year decrease of RMB11.9 million, or 11.8% on an annual base. The average sales price decline contributed to a RMB3.6 million year-over-year decrease while lower sales volume represented a decline of RMB8.3 million.

Sales of specialty films in the second quarter of 2022  were RMB64.9 million (US$9.7 million), or 73.1% of total revenues, compared to RMB69.0 million, or 68.6% in the same period of 2021, representing a decrease of RMB4.1 million, or 5.9%. The decline in sales volume resulted in a reduction of RMB2.0 million, while a lower average sales price caused a decrease of RMB2.1 million.

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

	Three-Month Period Ended  June 30, 2022		% of Total		Three-Month Period Ended June 30, 2021	% of Total
	RMB	US$			RMB
Stamping and transferring film	15,594	2,328	17.6 %		21,762	21.6 %
Printing film	4,626	691	5.2 %		5,232	5.2 %
Metallization film	161	24	0.2 %		1,090	1.1 %
Specialty film	64,864	9,684	73.1 %		68,979	68.6 %
Base film for other applications	3,489	521	3.9 %		3,519	3.5 %
	88,734	13,248	100.0 %		100,582	100.0 %

 

Overseas sales totaled RMB9.4 million, or US$1.4 million, equivalent to10.6% of total revenues, compared with RMB13.4 million, or 13.3% of total revenues in the second quarter of 2021. Higher average sales price represented an increase of RMB0.6 million, while the sales volume decline resulted in a decrease of RMB4.6 million.

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

	Three-Month Period Ended  June 30, 2022			% of Total	Three-Month Period Ended June 30, 2021	% of Total
	RMB		US$		RMB
Sales in China	79,330		11,844	89.4 %	87,205	86.7 %
Sales in other countries	9,404		1,404	10.6 %	13,377	13.3 %
	88,734		13,248	100.0 %	100,582	100.0 %

 

Gross profit was RMB24.9 million (US$3.7 million) for the second quarter ended June 30, 2022, representing a gross profit margin of 28.1%, compared to a gross profit margin of 39.6% for the same period in 2021.

Operating expenses for the second quarter ended June 30, 2022, amounted to RMB14.1 million (US$2.1 million) compared to RMB14.0 million in the same 2021 period.

Net profit attributable to the Company during the second quarter ended June 30, 2022, totaled RMB13.7 million (US$2.0 million), while net profit attributable to the Company was RMB19.8 million during the same period in 2021.

Basic and diluted net profit per share was RMB4.20 (US$0.63) and RMB6.06 for the three-month period ended June 30, 2022, and 2021, respectively.

Total shareholders' equity was RMB347.8 million, or US$51.9 million, as of June 30, 2022, compared with RMB317.0 million as of December 31, 2021.  

As of June 30, 2022, the Company had 3,265,837 basic and diluted ordinary shares outstanding.

Financial Results for the Six Months Ended June 30, 2022

Net sales during the six-month period ended June 30, 2022, were RMB191.9 million (US$28.6 million), compared to RMB202.2 million in the same period in 2021, representing a 5.1% decrease, or RMB10.3 million. The average sales price decline represented a decrease of RMB3.7 million, while lower sales volume resulted in a decrease of RMB6.6 million.

In the six-month period ended June 30, 2022, sales of specialty films totaled RMB136.8 million (US$20.4 million), or 71.3% of our total revenues, compared to RMB133.9 million, or 66.2% in the same period of 2021. Specialty films sales rose RMB2.9 million, or 2.2%, compared to the same period in 2021. The increase in sales volume amounted to RMB4.9 million, while lower average sales price caused a decrease of RMB2.0 million.

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

	Six-Month Period Ended  June 30, 2022		% of Total		Six-Month Period Ended June 30, 2021	% of Total
	RMB	US$			RMB
Stamping and transferring film	37,705	5,630	19.7 %		47,113	23.3 %
Printing film	9,103	1,359	4.7 %		10,714	5.3 %
Metallization film	1,582	236	0.8 %		2,733	1.4 %
Specialty film	136,811	20,425	71.3 %		133,941	66.2 %
Base film for other applications	6,666	995	3.5 %		7,705	3.8 %
	191,867	28,645	100.0 %		202,206	100.0 %

 

Overseas sales during the six months ended June 30, 2022, were RMB19.6 million, or US$2.9 million, equivalent to 10.2% of total revenues, compared with RMB22.4 million, or 11.1% of total revenues in the same period in 2021. Overseas sales declined RMB2.8 million from the same 2021 period. Lower sales volume explained the RMB4.2 million decrease, while a higher average sales price contributed to an increase of RMB1.4 million.

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

		Six-Month Period Ended  June 30, 2022		% of Total	Six-Month Period Ended June 30, 2021	% of Total
		RMB	US$		RMB
Sales in China		172,252	25,717	89.8 %	179,801	88.9 %
Sales in other countries		19,615	2,928	10.2 %	22,405	11.1 %
		191,867	28,645	100.0 %	202,206	100.0 %

 

Our gross profit totaled RMB55.1 million (US$8.2 million) for the first six months ended June 30, 2022, representing a gross margin of 28.7%, compared to a gross margin of 40.7% for the same period in 2021, a 12% decrease in the period. Our average product sales prices fell 1.9% from the same period last year, while the average cost of goods sold rose 18.0% compared to last year, resulting in a decrease in our gross margin.

Operating expenses for the six months ended June 30, 2022, were RMB27.8 million (US$4.2 million), compared to RMB24.4 million in the same period in 2021, equal to RMB3.4 million, or 13.9% higher than the same period in 2021. This increase was mainly explained by higher expenses on R&D and welfare.

Net income attributable to the Company during the first half of 2022 was RMB30.8 million (US$4.6 million) compared to net income attributable to the Company of RMB51.2 million during the same period in 2021, a RMB20.4 million decrease from the same period in 2021 explained by the factors described above.

Cash, cash equivalent and restricted cash totaled RMB265.2million (US$39.6 million) as of June 30, 2022. Total shareholders' equity was RMB347.8 million (US$51.9 million).

As of June 30, 2022, the Company had 3,265,837 basic and diluted total 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.

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.:

Lucia Domville
Investor Relations
Grayling
Phone: +1-646-824-2856
Email: lucia.domville@grayling.com

 Financial Tables to Follow

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2022, AND DECEMBER 31, 2021
(amounts in thousands except share and per share value)
(Unaudited)
		June 30, 2022			December 31, 2021
		RMB	US$		RMB
ASSETS
Current assets
Cash and cash equivalents		245,728	36,686		250,608
Restricted cash		19,500	2,911		28,294
Accounts and bills receivable, net		25,337	3,783		29,225
Inventories		47,030	7,021		35,456
Advance to suppliers		17,645	2,634		7,933
Prepayments and other receivables		2,266	338		1,199
Deferred tax assets - current		1,152	172		1,144
Total current assets		358,658	53,545		353,859
Property, plant and equipment, net		101,712	15,185		106,928
Construction in progress		6,253	934		-
Lease prepayments, net		14,418	2,153		14,685
Deferred tax assets – non-current		156	23		227
Total assets		481,197	71,840		475,699
Current liabilities
Short-term borrowings		65,000	9,704		65,000
Accounts payables		22,368	3,339		22,616
Notes payable		37,470	5,594		50,126
Advance from customers		1,343	201		7,672
		5,429	811		11,479
Total current liabilities		131,610	19,649		156,893
Deferred tax liabilities		1,756	262		1,789
Total liabilities		133,366	19,911		158,682
Equity
Shareholders' equity
Registered capital (of US$0.519008 par value; 135,000,000 shares authorized; 3,265,837 issued and outstanding)		13,323	1,989		13,323
Additional paid-in capital		311,907	46,566		311,907
Statutory reserve		37,441	5,590		37,441
Retained earnings		(15,680)	(2,341)		(46,494)
Cumulative translation adjustment		840	125		840
Total shareholders' equity		347,831	51,929		317,017
Total equity		347,831	51,929		317,017
Total liabilities and equity		481,197	71,840		475,699

 

 

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, 2022, AND 2021
(amounts in thousands except share and per share value)
(Unaudited)
		The Three-Month Period Ended June 30,						The Six-Month Period Ended June 30,
		2022			2021			2022			2021
		RMB	US$		RMB			RMB	US$		RMB
Net sales		88,734	13,248		100,582			191,867	28,645		202,206
Cost of sales		63,832	9,530		60,728			136,795	20,423		119,902
Gross profit		24,902	3,718		39,854			55,072	8,222		82,304
Operating expenses
Selling expenses		5,237	782		4,944			10,378	1,549		9,058
Administrative expenses		8,856	1,322		9,014			17,431	2,602		15,369
Total operating expenses		14,093	2,104		13,958			27,809	4,151		24,427
Operating income		10,809	1,614		25,896			27,263	4,071		57,877
Other income (expense)
- Interest income		2,016	301		1,368			3,877	579		2,225
- Interest expense		(1,080)	(161)		(1,378)			(2,138)	(319)		(2,953)
- Other incomes (expense), net		1,973	295		(344)			1,842	275		(222)
Total other income (expense)		2,909	435		(354)			3,581	535		(950)
Income before provision for income taxes		13,718	2,049		25,542			30,844	4,606		56,927
Income tax expense		(12)	(2)		(5,736)			(30)	(4)		(5,755)
Net income		13,706	2,047		19,806			30,814	4,602		51,172
Net income (loss) attributable to non-controlling interests		-	-		-			-	-		-
Net income (loss) attributable to the Company		13,706	2,047		19,806			30,814	4,602		51,172
Other comprehensive income (loss)
- 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		13,706	2,047		19,806			30,814	4,602		51,172
Earnings per share, Basic and diluted		4.20	0.63		6.06			9.44	1.41		15.67
Weighted average number of 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, 2022, AND 2021
(amounts in thousands except share and per share value)
(Unaudited)
		The Six-Month Period Ended June 30,
		2022			2021
		RMB	US$		RMB
Cash flow from operating activities
Net income		30,814	4,602		51,172
Adjustments to reconcile net loss to net cash
used in operating activities
- Depreciation of property, plant and equipment		6,646	992		6,109
- Amortization of intangible assets		267	40		266
- Deferred income taxes		30	4		5,755
- Bad debt recovery		53	8		338
-Inventory provision		-	-		(497)
Changes in operating assets and liabilities
- Accounts and bills receivable		3,836	573		(12,667)
- Inventories		(11,575)	(1,728)		1,456
- Advance to suppliers		(9,712)	(1,450)		(2,102)
- Prepaid expenses and other current assets		(1,067)	(159)		(52)
- Accounts payable		(248)	(37)		(3,967)
- Accrued expenses and other payables		(5,976)	(893)		(21,118)
- Advance from customers		(6,328)	(945)		(6,389)
- Tax payable		(76)	(11)		1,682
Net cash provided by (used in) operating activities		6,664	996		19,986
Cash flow from investing activities
Purchases of property, plant and equipment		(1,429)	(213)		(730)
Proceeds from sale of property, plant and equipment		-	-		122,919
Advanced to suppliers - non-current		-	-		1,542
Amount change in construction in progress		(6,253)	(934)		-
Net cash provided by (used in) investing activities		(7,682)	(1,147)		123,731
Cash flow from financing activities
Principal payments of bank loans		-	-		-
Proceeds from (payment to) short-term bank loans		-	-		-
Proceeds from (payment to) related party		-	-		(73,571)
Change in notes payable		(12,656)	(1,889)		(15,000)
Net cash (used in) provided by financing activities		(12,656)	(1,889)		(88,571)
Effect of foreign exchange rate changes		-	(2,129)		-
Net increase in cash and cash equivalent		(13,674)	(4,169)		55,146
Cash and cash equivalent
At beginning of the period		278,902	43,766		120,923
At end of the period		265,228	39,597		176,069
SUPPLEMENTARY DISCLOSURE:
Interest paid		2,138	319		2,953
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:
Account payable for plant and equipment:		1,010	151		1,010

 

 

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SOURCE Fuwei Films

FAQ

What were the financial results for Fuwei Films (FFHL) in Q2 2022?

Fuwei Films reported Q2 2022 net sales of RMB88.7 million (US$13.2 million), a decrease of 11.8% year-over-year. Gross profit was RMB24.9 million with a margin of 28.1%.

How did Fuwei Films' specialty films perform in Q2 2022?

Sales of specialty films were RMB64.9 million (US$9.7 million), accounting for 73.1% of total revenues, but represented a decrease of 5.9% from Q2 2021.

What was the net income for Fuwei Films in the first half of 2022?

Net income for the first half of 2022 was RMB30.8 million (US$4.6 million), down from RMB51.2 million in the same period in 2021.

What factors contributed to the decline in Fuwei Films' sales in Q2 2022?

The decline in sales was attributed to lower sales volume and a decrease in average sales prices.

How have Fuwei Films' operating expenses changed in 2022?

Operating expenses increased to RMB27.8 million (US$4.2 million) in H1 2022, up 13.9% from RMB24.4 million in H1 2021 due to higher R&D and welfare costs.