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

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):

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):

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

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SOURCE Fuwei Films