Fuwei Films (Holdings) Co., Ltd (NASDAQ:FFHL)
Q1 2016 Earnings Conference Call
May 20, 2016 09:00 AM ET
Vivian Chen - Investor Relations, Grayling
Xiuyong Zhang - Director and Chief Financial Officer
Yong Jiang - Corporate Secretary
Greetings, and welcome to the Fuwei Films First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Ms. Vivian Chen with Grayling. Thank you. You may begin.
Thank you, Melissa. Let me remind you today’s call is being recorded. A replay of this call will be made available shortly after the conclusion of today’s call. Before we start, I would like to remind you that certain statements that are not of historical facts made during the course of the conference call about future events and projected financial results constitute forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. You should note that the Company’s actual results may differ materially from those projected in these statements due to a variety of factors affecting the business.
Forward-looking statements are subject to risks and uncertainties. Discussion of the factors that may affect future results is contained in our filings with the U.S. Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statements provided as a result of new information, future events or changes in our expectations.
Joining us on today’s call is Mr. Yong Jiang, Corporate Secretary. Before I walk you through our financial results, Mr. Zhang will deliver his opening remarks. And my colleague Xiuyong Zhang will translate Mr. Zhang’s remarks. Mr. Zhang, please go ahead.
Thank you, Vivian. Hello, everyone and thank you for joining us today. The first quarter financial results reflected encouraging results in revenues due to sales in specialty films, which contributed to an increase in volumes that also led to improved margins. Despite weakened market conditions due to significant competition which caused oversupply and excess capacity in the marketplace. We believe that our focus on continued innovation and R&D will enable the Company to expend and user applications and our high-end specialty films while increasing the product portfolio which we believe will help us to attract new clients and expend relationships with existing customers.
We are encouraged by positive trends in sales volume and gross margins that we expect to enable us to weather difficult industry and economic conditions in the periods ahead. Now Vivian will read to you our financial results for the first quarter of 2016. Then I will begin the Q&A session.
Thank you, Xiwei and thank you Mr. Zhang. I will now provide you with an overview of our key financial numbers in the first quarter of 2016. Then I will offer some updates on our operations followed by the management Q&A.
Net sales during the first quarter ended March 31, 2016 were RMB62.1 million or $9.6 million, compared to RMB52.8 million during the same period in 2015, representing an increase of RMB9.3 million or 17.6% mainly due to the increased sales volume. In the first quarter of 2016 sales of specialty films were RMB21.8 million or $3.4 million or 35% of our total revenues as compared to RMB15 million or 28.5% in the same period of 2015. The increase was largely attributable to increase in sales volume for dry films and coated films.
Overseas sales were RMB12.5 million or $1.9 million, or 20.1% of total revenues compared with RMB13.1 million or 24.8% of total revenues in the first quarter of 2015, representing a decrease of RMB0.6 million or 4.6%. The decrease in overseas sales was mainly due to the reduction of sales prices.
Our gross profit was RMB5.6 million or $0.9 million for the first quarter ended March 31, 2016, representing a gross margin of 9%, as compared to a gross loss margin of 14.8% for the same period in 2015. Correspondingly, gross margin rate increased by 23.8 percentage points compared to the same period in 2015. Our average product sales prices decreased by 2% compared to the same period in 2015 while the average cost of goods sold decreased by 22.3% compared to the same period last year, which contributed to the increase in our gross margin compared with the same period in 2015.
Operating expenses for the first quarter ended March 31, 2016 were RMB15 million or $2.3 million, which was RMB6.2 million, or 70.5% higher than the same period in 2015. This increase was mainly due to the accounting treatment that allocated certain amount of fixed overhead from cost of goods sold to general and administrative expense due to the fact that our third production line has not been able to continue its production since April 2015, in addition to the increased allowance for doubtful accounts receivable.
Net loss attributable to the Company during the first quarter ended March 31, 2016 was RMB12.1 million or $1.9 million compared to net loss attributable to the Company of RMB15 million during the same period in 2015, representing a decrease of RMB2.9 million. Basic and diluted net loss per share was RMB0.92 or $0.14 and RMB1.15 for the three-month period ended March 31, 2016 and 2015, respectively.
Total shareholders' equity was RMB307.6 million or $47.7 million as of March 31, 2016, compared with RMB319.7 million as of December 31, 2015. As of March 31, 2016, the Company had 13,062,500 basic and diluted ordinary shares outstanding. In conclusion we would like to thank our shareholders for their continued loyalty and support. We believe we are well positioned to face the current challenges and are committed to providing value to our shareholders and customers. We will keep you informed of our progress.
With that, Mr. Zhang will be happy to answer your questions. We recall your patience as we translate each question and each answer. Operator, please begin the Q&A.
Thank you, Melissa. Thank you for joining us on this conference call. We look forward to being touch with you and we’ll keep you updated about our progress. Thank you everyone. This now concludes our conference call.
Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
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