Fuwei Films (Holdings) Co., Ltd. Q1 2019 Results Earnings Conference Call June 27, 2019 9:00 AM ET
Shiwei Yin - Investor Relations
Yong Jiang - Corporate Secretary
Conference Call Participants
Greetings. Welcome to Fuwei Films’ First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note, this conference is being recorded.
I would now like to turn the conference over to your host today, Shiwei Yin. Mr. Yin, you may begin.
Thank you, Mark. Let me remind you today that 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, we'd like to remind you also that certain statements that are not of historical facts made during the course of this 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 know that the company’s actual results may differ materially from those projected in these statements due to a variety of factors affecting our 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 US 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 financials, Mr. Jiang will deliver his opening remarks and I will translate Mr. Jiang's remarks. Sir, please go ahead.
Hello, everyone. And thank you for joining us today. While we continue to face headwinds due to oversupply in the marketplace, we are encouraged by a continuing positive trends in overall sales, sales of specialty films and improvement in gross margins.
We believe our commitment to innovation and R&D have expanded the end user applications of our films that will enable the company to capitalize on new opportunities despite challenging industry and economic conditions.
Now, Shiwei will read to you our financial results for the first quarter of 2019. Then I will begin the Q&A session.
Thank you, Mr. Jiang. I will now provide with an overview of our key financial numbers in the first quarter of 2019.
Net sales during the first quarter ended March 31, 2019 were RMB 81.1 million (US$12.1 million) compared to RMB 76.9 million during the same quarter in 2018, representing an increase of RMB 4.2 million or 5.5%, mainly due to the increased sales price.
In the first quarter of 2019, sales of specialty films were RMB 32.2 million (US$4.8 million) or 39.7% of our total revenues as compared to RMB 32.9 million or 42.8% in the same period of 2018. The decrease was mainly due to decreased sales volume.
Overseas sales were RMB 16.2 million, or US$2.4 million, and 20.0% of total revenues compared with RMB 11.0 million or 14.3% of total revenues in the first quarter of 2018, representing an increase of RMB 5.2 million or 47.3%. Higher sales volume resulted in an increase of RMB 4.2 million in overseas sales, and increases in sale prices led to an increase of RMB 1.0 million.
Gross profit was RMB 12.4 million (US$1.8 million) for the first quarter, representing a gross margin of 15.3% as compared to a gross margin of 12.3% for the same period in 2018. Correspondingly, gross margin rate increased by 3.0 percentage points compared to the same period in 2018.
Our average product sales prices increased by 3.8% compared to the same period in 2018, while our average cost of goods sold increased by 0.3% compared to the same period.
Consequently, the increase in average product sales prices was significantly higher than that in the average cost of goods sold during the first quarter, which contributed to the increase in our gross margin compared to the same period in 2018.
Operating expenses for the first quarter ended March 31, 2019 were RMB 13.5 million (US$2.0 million), which was RMB 2.3 million or 14.6% lower than the same period in 2018. This decrease was mainly due to the decreased allowance for doubtful accounts receivable and increased expense in R&D.
Net loss attributable to the company during the first quarter ended March 31, 2019 was RMB 3.4 million (US$0.5 million) compared to a net loss attributable to the company of RMB 8.2 million during the same period in 2018.
Basic and diluted net loss per share was RMB 1.03 (US$0.15) and RMB 2.51 for the three-month period ended March 31, 2019 and 2018, respectively.
Net cash provided by operating activities was RMB 5.6 million for the three months ended March 31, 2019 as compared to net cash provided by operating activities of RMB 4.0 million for the same period in 2018.
Cash and cash equivalents on March 31, 2019 was RMB 30.3 million or US$4.5 million compared with RMB 8.9 million as of December 31, 2018.
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'll keep you informed of our progress.
With that, Mr. Jiang will be happy to answer your questions. We require your patience as we translate each question and answer. Mark, please begin the Q&A.
There are no questions at this time and I would like to turn the call back over to Shiwei Yin for closing remarks.
Thank you for joining us today on today's conference call. We look forward to being in touch with you and we will keep you updated about our progress. Thank you. Have a good day.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.