PR Newswire | Sep 2, 2021 04:16PM EDT

2021

09/02 15:15 CDT

Fuwei Films Announces Its Unaudited Financial Results for the Second Quarter of 2021 BEIJING, Sept. 2, 2021

-Teleconference to be Held on Friday, September 3, 2021 at 8:00 am ET-

BEIJING, Sept. 2, 2021 /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 and first six months of 2021 ended June 30, 2021.

Second Quarter 2021 Financial Highlights

* Net sales were RMB100.6 million (US$15.6 million), compared to RMB82.9 million during the same period in 2020, representing a year-over-year increase of RMB17.7 million or 21.4%. * Sales of specialty films were RMB69.0 million (US$10.7 million) or 68.6% of our total revenues as compared to RMB48.1 million or 58.0% in the same period of 2020, which was a year-over-year increase of RMB20.9 million, or 43.5%. * Overseas sales were RMB13.4 million (US$2.1 million) or 13.3% of total revenues, compared with RMB7.5 million or 9.1% of total revenues in the second quarter of 2020. * Gross profit was RMB39.9 million (US$6.2 million), representing a gross profit rate of 39.6%. * Net profit attributable to the Company was RMB19.8 million (US$3.1 million), compared with net profit attributable to the Company of RMB14.1 million during the same period in 2020.

First Six Months 2021 Financial Highlights

* Net sales were RMB202.2 million (US$31.3 million), compared to RMB166.1 million in the same period in 2020, representing an increase of RMB36.1 million or 21.7%. * Sales of specialty films were RMB133.9 million (US$20.7 million) or 66.2% of our total revenues as compared to RMB88.0 million or 53.0% in the same period of 2020. * Overseas sales were RMB22.4 million (US$3.5 million), or 11.1% of total revenues, compared with RMB13.3 million or 8.0% of total revenues in the same period in 2020. * Our gross profit was RMB82.3 million (US$12.7 million), representing a gross margin rate of 40.7%, as compared to a gross margin rate of 38.7% for the same period in 2020. * Net income attributable to the Company was RMB51.2 million (US$7.9 million), compared to net income attributable to the Company of RMB27.0 million during the same period in 2020.

Mr. Lei Yan, Chairman and CEO of Fuwei Films, commented, "We continued to achieve positive trends in our mix of sales, especially sales of specialty films which accounted for 68.6% of our total revenues for the second quarter ended June 30, 2021. 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 carry on with these efforts and expect that they will enable the Company to capitalize on new opportunities despite challenging industry and economic conditions."

Second Quarter 2021 Results

Net sales during the second quarter ended June 30, 2021 were RMB100.6 million (US$15.6 million), compared to RMB82.9 million during the same period in 2020, representing a year-over-year increase of RMB17.7 million or 21.4%. The increase of average sales price caused a year-over-year increase of RMB15.6 million and higher sales volume caused an increase of RMB2.1 million.

In the second quarter of 2021, sales of specialty films were RMB69.0 million (US$10.7 million) or 68.6% of our total revenues as compared to RMB48.1 million or 58.0% in the same period of 2020, which was an increase of RMB20.9 million, or 43.5% as compared to the same period in 2020. The increase of sales volume caused an increase of RMB16.0 million and the increase in the average sales price caused an increase of RMB4.9 million.

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

Three-Month Period % of Three-Month Period % of Ended Total Ended Total June 30, 2021 June 30, 2020

RMB US$ RMB

Stamping and transfer 21,762 3,371 21.6% 25,885 31.3%film

Printing film 5,232 810 5.2% 5,746 6.9%

Metallization film 1,090 169 1.1% 1,159 1.4%

Specialty film 68,979 10,683 68.6% 48,088 58.0%

Base film for other 3,519 545 3.5% 1,978 2.4%application

100,582 15,578 100.0% 82,856 100.0%

Overseas sales were RMB13.4 million or US$2.1 million, or 13.3% of total revenues, compared with RMB7.5 million or 9.1% of total revenues in the second quarter of 2020. The increase of average sales price caused an increase of RMB0.6 million and the increase in sales volume resulted in an increase of RMB5.3 million.

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

Three-Month Period Three-Month Period Ended % of Total Ended % of Total June 30, 2021 June 30, 2020

RMB US$ RMB

Sales in China 87,205 13,506 86.7% 75,334 90.9%

Sales in other 13,377 2,072 13.3% 7,522 9.1%countries

100,582 15,578 100.0% 82,856 100.0%

Gross profit was RMB39.9 million (US$6.2 million) for the second quarter ended June 30, 2021, representing a gross profit rate of 39.6%, as compared to a gross profit rate of 41.6% for the same period in 2020.

Operating expenses for the second quarter ended June 30, 2021 were RMB14.0 million (US$2.2 million), as compared to RMB18.7 million for the same period in 2020. This decrease was mainly due to the decrease of accrual depreciation of the third production line and trial production line as these two production lines were sold.

Net profit attributable to the Company during the second quarter ended June 30, 2021 was RMB19.8 million (US$3.1 million) while net profit attributable to the Company was RMB14.1 million during the same period in 2020.

Financial Results for the Six Months Ended June 30, 2021

Net sales during the six-month period ended June 30, 2021 were RMB202.2 million (US$31.3 million), compared to RMB166.1 million in the same period in 2020, representing an increase of RMB36.1 million or 21.7%. The increase in average sales price caused an increase of RMB22.0 million and the increase in the sales volume caused an increase of RMB14.1 million.

In the six-month period ended June 30, 2021, sales of specialty films were RMB133.9 million (US$20.7 million) or 66.2% of our total revenues as compared to RMB88.0 million or 53.0% in the same period of 2020, which was an increase of RMB45.9 million, or 52.2% as compared to the same period in 2020. The increase in sales volume caused an increase of RMB41.6 million and the increase in the average sales price caused an increase of RMB4.3 million.

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

Six-Month Period % of Six-Month Period % of Ended Total Ended Total June 30, 2021 June 30, 2020

RMB US$ RMB

Stamping and transfer 47,113 7,298 23.3% 60,406 36.3%film

Printing film 10,714 1,659 5.3% 11,591 7.0%

Metallization film 2,733 423 1.4% 2,661 1.6%

Specialty film 133,941 20,745 66.2% 87,965 53.0%

Base film for other 7,705 1,193 3.8% 3,466 2.1%application

202,206 31,318 100.0% 166,089 100.0%

Overseas sales during the six months ended June 30, 2021 were RMB22.4 million or US$3.5 million, or 11.1% of total revenues, compared with RMB13.3 million or 8.0% of total revenues in the same period in 2020. This was RMB9.1 million higher than the same period in 2020. The increase in sales volume resulted in an increase of RMB8.1 million while higher average sales price caused an increase of RMB1.0 million.

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

Six-Month Period Six-Month Period Ended % of Total Ended % of Total June 30, 2021 June 30, 2020

RMB US$ RMB

Sales in China 179,801 27,848 88.9% 152,783 92.0%

Sales in other 22,405 3,470 11.1% 13,306 8.0%countries

202,206 31,318 100.0% 166,089 100.0%

Our gross profit was RMB82.3 million (US$12.7 million) for the first six months ended June 30, 2021, representing a gross margin rate of 40.7%, as compared to a gross margin rate of 38.7% for the same period in 2020. Correspondingly, gross margin rate increased by 2.0 percentage points. Our average product sales prices increased by 12.2% compared to the same period last year while the average cost of goods sold increased by 8.4% compared to the same period last year. Consequently, it resulted in an increase in our gross margin.

Operating expenses for the six months ended June 30, 2021 were RMB24.4 million (US$3.8 million), compared to RMB33.8 million in the same period in 2020, which was RMB9.4 million or 27.8% lower than the same period in 2020. This decrease was mainly due to the decrease of accrual depreciation of the third production line and trial production line.

Net income attributable to the Company during the first half of 2021 was RMB51.2 million (US$7.9 million) compared to net income attributable to the Company of RMB27.0 million during the same period in 2020, representing an increase of RMB24.2 million from the same period in 2020 due to the factors described above.

Cash, cash equivalent and restricted cash totaled RMB176.1 million (US$27.3 million) as of June 30, 2021. Total shareholders' equity was RMB279.0 million (US$43.2 million).

As of June 30, 2021, the Company had 3,265,837 basic and diluted total ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Friday, September 3, 2021, at 8:00 a.m. ET / 8:00 p.m.Beijing time to discuss the financial results. To participate in the call, please dial +1-844-602-0380 in North America, or +1-862-298-0970 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: 42544. The replay will be available until September 17, 2021.

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 YuInvestor Relations OfficerPhone: +86-133-615-59266Email: fuweiIR@fuweifilms.com

In the U.S.:

Shiwei YinInvestor RelationsGraylingPhone: +1-646-284-9474Email: shiwei.yin@grayling.com

And

Lucia DomvilleInvestor RelationsGraylingPhone: +1-646-824-2856Email: lucia.domville@grayling.com

Financial Tables to Follow

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

(amounts in thousands except share and per share value)

(Unaudited)

June 30, 2021 December 31, 2020

RMB US$ RMB

ASSETS

Current assets

Cash and cash equivalents 176,069 27,270 113,423

Restricted cash - - 7,500

Accounts and bills receivable, net 43,797 6,783 32,393

Inventories 24,477 3,791 25,436

Advance to suppliers 10,388 1,609 7,359

Prepayments and other receivables 1,155 179 1,103

Assets held for sale - - 122,919

Deferred tax assets - current 1,369 212 6,947

Total current assets 257,255 39,844 317,080

Property, plant and equipment, net 105,928 16,406 111,308

Lease prepayments, net 14,952 2,316 15,219

Advance to suppliers - long term, net - - 1,542

Deferred tax assets - non current 297 46 507

Total assets 378,432 58,612 445,656

LIABILITIES AND EQUITY

Current liabilities

Short-term borrowings 65,000 10,067 65,000

Due to related parties - - 73,571

Accounts payables 21,763 3,371 25,730

Notes payable - - 15,000

Advance from customers 2,908 450 9,297

Accrued expenses and other payables 7,964 1,233 27,400

Total current liabilities 97,635 15,121 215,998

Deferred tax liabilities 1,821 282 1,854

Total liabilities 99,456 15,403 217,852

Equity

Shareholders' equity

Registered capital (of US$0.519008 par value; 5,000,000 shares 13,323 2,063 13,323authorized; 3,265,837 issued and outstanding)

Additional paid-in capital 311,907 48,308 311,907

Statutory reserve 37,441 5,799 37,441

Retained earnings (84,535) (13,093) (135,707)

Cumulative translation adjustment 840 132 840

Total shareholders' equity 278,976 43,209 227,804

Total equity 278,976 43,209 227,804

Total liabilities and equity 378,432 58,612 445,656

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, 2021 AND 2020

(amounts in thousands except share and per share value)

(Unaudited)

The Three-Month Period Ended June 30, The Six-Month Period Ended June 30,

2021 2020 2021 2020

RMB US$ RMB RMB US$ RMB

Net sales 100,582 15,578 82,856 202,206 31,318 166,089

Cost of sales 60,728 9,406 48,421 119,902 18,570 101,895

Gross profit 39,854 6,172 34,435 82,304 12,748 64,194

Operating expenses

Selling expenses 4,944 766 3,372 9,058 1,403 7,458

Administrative 9,014 1,396 15,368 15,369 2,380 26,323expenses

Total operating 13,958 2,162 18,740 24,427 3,783 33,781expenses

Operating income 25,896 4,010 15,695 57,877 8,965 30,413

Other income (expense)

- Interest income 1,368 212 567 2,225 345 857

- Interest expense (1,378) (213) (2,241) (2,953) (457) (4,457)

- Others income (344) (53) 49 (222) (34) 118(expense), net

Total other expenses (354) (54) (1,625) (950) (146) (3,482)

Income(loss) beforeprovision for income 25,542 3,956 14,070 56,927 8,819 26,931taxes

Income tax benefit (5,736) (888) (13) (5,755) (891) 81(expense)

Net income (loss) 19,806 3,068 14,057 51,172 7,928 27,012

Net income (loss)attributable to - - - - - -non-controllinginterests

Net income (loss)attributable to the 19,806 3,068 14,057 51,172 7,928 27,012Company

Other comprehensiveincome (loss)

- Foreign currencytranslationadjustments - - - - - -attributable tonon-controllinginterest

- Foreign currencytranslationadjustments - - - - - -attributable to theCompany

Comprehensive lossattributable to - - - - - -non-controllinginterest

Comprehensive income(loss ) attributable 19,806 3,068 14,057 51,172 7,928 27,012to the Company

Earnings (loss) pershare, 6.06 0.94 4.30 15.67 2.43 8.27Basic and diluted

Weighted averagenumber ordinary 3,265,837 3,265,837 3,265,837 3,265,837 3,265,837 3,265,837shares,Basic and diluted

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2021 AND 2020

(amounts in thousands except share and per share value)

(Unaudited)

The Six-Month Period Ended June 30,

2021 2020

RMB US$ RMB

Cash flow from operating activities

Net loss 51,172 7,928 27,012

Adjustments to reconcile net loss to net cash

used in operating activities

- Depreciation of property, plant and 6,109 946 17,986equipment

- Amortization of intangible assets 266 41 267

- Deferred income taxes 5,755 891 (81)

- Bad debt recovery 338 52 160

-Inventory provision (497) (77) -

Changes in operating assets and liabilities

- Accounts and bills receivable (12,667) (1,962) (15,026)

- Inventories 1,456 226 (2,523)

- Advance to suppliers (2,102) (326) (2,497)

- Prepaid expenses and other current assets (52) (8) (87)

- Accounts payable (3,967) (614) 1,176

- Accrued expenses and other payables (21,118) (3,271) 210

- Advance from customers (6,389) (990) (793)

- Tax payable 1,682 261 65

Net cash provided by (used in) operating 19,986 3,097 25,869activities

Cash flow from investing activities

Purchases of property, plant and equipment (730) (113) (1,232)

Proceeds from sale of property, plant and 122,919 19,038 -equipment

Advanced to suppliers - non current 1,542 239 -

Amount change in construction in progress - - (999)

Net cash provided by (used in) investing 123,731 19,164 (2,231)activities

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) (11,395) 2,309

Change in notes payable (15,000) (2,323) (31,000)

Net cash (used in) provided by financing (88,571) (13,718) (28,691)activities

Effect of foreign exchange rate changes - 195 -

Net increase in cash and cash equivalent 55,146 8,738 (5,053)

Cash and cash equivalent

At beginning of period 120,923 18,532 86,371

At end of period 176,069 27,270 81,318

SUPPLEMENTARY DISCLOSURE:

Interest paid 2,953 457 4,457

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment: 1,010 156 1,010

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SOURCE Fuwei Films