Fuwei Films Announces Its Unaudited Financial Results for the Third Quarter of 2016

BEIJING, Nov. 28, 2016 /PRNewswire/ --

-Teleconference to be Held on Tuesday, November 29, 2016 at 8:00 am EST-

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 three and nine months ended September 30, 2016.

Highlights

• Net sales during the third quarter ended September 30, 2016 were RMB61.6 million or US$9.2 million.
• In the third quarter of 2016, sales of specialty films were RMB22.7 million or US$3.4 million or 36.8% of our total revenues as compared to RMB18.7 million or28.5% in the same period of 2015, which was an increase of RMB4.0 million.
• Our gross profit was RMB1.1 million or US$0.2 million for the third quarter ended September 30, 2016, representing a gross profit rate of 1.7%.
• Basic and diluted net loss per share was RMB1.03 or US$0.15 and RMB0.94 for the three-month period ended September 30, 2016 and 2015, respectively.

On November 22, 2016, a majority of the shareholders of the Company approve, in principal, a 1-for-4 reverse stock split of the Company's authorized ordinary shares, accompanied by a corresponding decrease in the Company's issued and outstanding ordinary shares and an increase of the par value of each ordinary share from $0.129752 to $US$0.519008, subject to an extraordinary meeting of shareholders to be held on December 5, 2016.

Third Quarter 2016 Results

Net sales during the third quarter ended September 30, 2016 were RMB61.6 million or US$9.2 million, compared to RMB65.7 million during the same period in 2015, representing a decrease of RMB4.1 million or 6.2%, mainly due to the reduction of average sales price by 5.9% arising from stronger competition in China and large reduction in prices of main raw materials. The reduction of average sales price caused a decrease of RMB3.8 million and the sales volume decrease caused a decrease of RMB0.3 million.

In the third quarter of 2016, sales of specialty films were RMB22.7 million or US$3.4 million or 36.8% of our total revenues as compared to RMB18.7 million or 28.5% in the same period of 2015, which was an increase of RMB4.0 million, or 21.4% as compared to the same period in 2015. The reduction in average sales price caused a decrease of RMB0.2 million and the increase in the sales volume caused an increase of RMB4.2 million.

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

Overseas sales were RMB11.4 million or US$1.7 million, or 18.4% of total revenues, compared with RMB16.1 million or 24.5% of total revenues in the third quarter of 2015. This is a decrease of RMB4.7 million. The decrease in average sales price caused a decrease of RMB1.4 million and the decrease in sales volume resulted in a decrease of RMB3.3 million.

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

Our gross profit was RMB1.1 million or US$0.2 million for the third quarter ended September 30, 2016, representing a gross profit rate of 1.7%, as compared to a gross profit rate of 5.8% for the same period in 2015. Correspondingly, gross profit rate decreased by 4.1 percent compared to the same period in 2015 mainly due to the reduction of average sales price.

Operating expenses for the third quarter ended September 30, 2016 were RMB12.7 million or US$1.9 million, which was RMB1.8 million, or 12.4% lower than the same period in 2015. This decrease was mainly due to decreased expenses on research and development.

Net loss attributable to the Company during the third quarter ended September 30, 2016 was RMB13.4 million or US$2.0 million compared to net loss attributable to the Company of RMB12.3 million during the same period in 2015, representing an increase in loss of RMB1.1 million compared with the same period in 2015.

Basic and diluted net loss per share was RMB1.03 or US$0.15and RMB0.94 for the three-month period ended September 30, 2016and 2015, respectively.

Total shareholders' equity was RMB283.9million or US$42.6million as of September 30, 2016, compared with RMB319.7million as of December 31, 2015.

As of September 30, 2016, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.

Nine Months 2016 Results

Net sales during the nine-month period ended September 30, 2016 were RMB183.0 million or US$27.4 million, compared to RMB185.2 million, during the same period in 2015, representing a decrease of RMB2.2 million or 1.2%, mainly due to the reduction of average sales price by 4.8% arising from stronger competition in China together with a reduction in prices of main raw materials.

In the nine-month period ended September 30, 2016, sales of specialty films were RMB68.0 million or US$10.2 million or 37.1% of our total revenues as compared to RMB55.0 million or 29.7% in the same period of 2015, which was an increase of RMB13.0 million, or 23.6%as compared to the same period in 2015. The reduction of average sales price caused a decrease of RMB2.3 million and the increase in the sales volume caused an increase of RMB15.3 million.

Overseas sales during the nine months ended September 30, 2016 were RMB35.1 million or US$5.3 million, or 19.2% of total revenues, compared with RMB44.3 million or 23.9% of total revenues in the same period in 2015. This was RMB9.2 million lower than the same period in 2015. The reduction in sales volume resulted in a decrease of RMB5.7 million and the decrease of average sales price caused a decrease of RMB3.5 million.

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

Our gross profit was RMB12.3 million or US$1.8 million for the first nine months ended September 30, 2016, representing a gross profit rate of 6.7%, as compared to a gross loss rate of 2.0% for the same period in 2015. Correspondingly, gross profit rate increased by 8.7 percentage points. Our average product sales prices decreased by 4.8% compared to the same period last year while the average cost of goods sold decreased by 12.9% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold was higher than that in sales revenue during the nine months ended September 30, 2016 compared with the same period in 2015, which resulted in an increase in our gross profit.

Operating expenses for the nine months ended September 30, 2016 were RMB42.2 million or US$6.3 million, compared to RMB36.4 million in the same period in 2015, which was RMB5.8 million or 15.9% higher than the same period in 2015. This increase is mainly due to depreciation charged to general and administrative expenses in the accounting period in which they are incurred as a result of lack of manufacturing from the third production line since April 2015 and increased allowance for doubtful accounts receivable.

On November 23, 2016, we announced receipt of a letter from Nasdaq Stock Market stating that since we have not regained compliance with Listing Rule 5550(a)(2) regarding our bid price, our ordinary shares will be delisted from the Nasdaq Capital Market. The letter further stated that unless we request an appeal of the staff's determination, trading of our ordinary shares will be suspended at the opening of business on December 1, 2016. We have appealed the staff's determination to a Hearing Panel (the "Panel")." A hearing request will stay the suspension of our ordinary shares pending the Panel's decision.

Conference Call Information

The Company will host a teleconference on Tuesday, November 29, 2016, at 8:00 a.m. EST / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-877-407-9205 in North America, or +1-201-689-8054 internationally, approximately 10 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: 10160. The replay will be available until December 29, 2016, at 11:59 p.m. EST.

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 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 both the possible delisting of the Company's ordinary shares from the NASDAQ Global Market; significant competition in the BOPET film industry, especially 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 adverse impact 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 main importing countries; fluctuations of RMB exchange rate, the reduce in demand for the Company's products or the loss of main customers which may result in the decrease of sales, and negatively influencing the Company's financial performance, uncertainty as to the future profitability, uncertainty as to the Company's ability to successfully obtain additional funds to meet the working capital needs of the new BOPET production line, uncertainty as to the Company's ability to continuously develop new BOPET film products to be produced by the third production line and keep up with changes in BOPET film technology, risks associated with possible defects and errors in its products including complaints and claims from clients, uncertainty as to its ability to protect and enforce its intellectual property rights, uncertainty as to its ability to attract and retain qualified executives and personnel, and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in light of the volatility in the prices of petroleum products in recent years, instability of power and energy supply, and the uncertainty regarding the future operation of the Company in connection with the changes in the labor law in China, the measures taken by the Chinese government to save energy and reduce emissions, and the complaints from nearby residents and local government about the noise caused by our production as well as the uncertainty of the impact of major shareholder transfer that have substantial influence over the Company and the Company's business operation including possible overlap of our BOPET products, customers and market orientation with an BOPET film manufacturer, which is controlled by the same individual who has control over the shares of our major shareholder. 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.:

Ms. Vivian Chen
Investor Relations
CitigateDeweRogerson
Phone: +1-646-284-9427
Email: vivian.chen@citigatedr.com

Financial Tables to Follow

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SOURCE Fuwei Films (Holdings) Co., Ltd.