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

BEIJING,Sept. 30,2022 --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

%ofTotal

Three-Month Period

Ended

June 30,2021

%ofTotal

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%

88,248

100.0%

100,582

100.0%

Gross profit was RMB24.9 million (US$3.7 million) for the second quarter ended June 30,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,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,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,and 2021,respectively.

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

As of June 30,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 periodended June 30,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,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,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

%ofTotal

Six-Month Period

Ended

June 30,2021

%ofTotal

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%

191,645

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,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,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 30,837 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

FUWEIFILMS (HOLDINGS) CO.,LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30,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; 3,837 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

347,017

Total liabilities and equity

481,699

FUWEIFILMS (HOLDINGS) CO.,LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30,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

88,248

100,582

191,645

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

13,172

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

13,172

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

3,837

3,837

3,837

FUWEIFILMS (HOLDINGS) CO.,LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30,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

30,172

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

(12,889)

(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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