Weijia Dai - Investor Relations, Grayling USA Yong Jiang - Board Secretary, Vice President of Shandong Fuwei.

Analysts:.

Greetings, and welcome to Fuwei Films First Quarter 2017 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] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Weijia..

Thank you. 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 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 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 expectation. Joining us on today's call is Mr. Yong Jiang, Corporate Secretary. Before I walk you through our financial results, Mr.

Jiang will deliver his opening remarks and I will translate Mr. Jiang's remarks. Sir, please go ahead..

[Interpreted] Thank you. Hello, everyone, and thank you for joining us today. While we continue to face strong competition from emerging and incumbent players in the marketplace, which had led to oversupply relative to demand in the marketplace, we're encouraged by positive trends in the sales of specialty films.

We believe our commitment to innovation and R&D has expanded our end-user applications that will enable the company to capitalize on these opportunities despite challenging industry and economic conditions..

Now, I will read to you our financial results for the first quarter of 2017. Then Mr. Jiang will begin the Q&A session. Now, I will provide you with an overview of our key financial numbers in the first quarter of 2017. Then I will offer some updates on our operations, followed by the management Q&A.

Net sales during the first quarter ended March 31, 2017 were RMB67.9 million or US$9.9 million, compared to RMB62.1 million, during the same period in 2016, representing an increase of RMB5.8 million or 9.3%, mainly due to the increased sales price.

In the first quarter of 2017, sales of specialty films were RMB21.8 million or US$3.2 million or 32.0% of our total revenues as compared to RMB21.8 million or 35.0% in the same period of 2016.

Overseas sales were RMB13.2 million or US$1.9 million, or 19.4% of total revenues, compared with RMB12.5 million or 20.1% of total revenues in the first quarter of 2016, representing an increase of RMB0.7 million or 5.6%.

While a decrease in sales volume caused a decrease of RMB0.2 million, this was offset by an increase of RMB0.9 million caused by the increase of sales price.

Our gross profit was RMB3.8 million or US$0.5 million in the first quarter ended March 31, 2017, representing a gross margin of 5.5%, as compared to a gross margin of 9.0% for the same period in 2016. Correspondingly, gross margin rate decreased by 3.5 percentage points compared to the same period in 2016.

Our average cost of goods sold increased by 13.2% compared to the same period in 2016, due to the price increase of main raw materials.

Consequently, the increase in the average cost of goods sold was significantly higher than that in average product sales prices during the first quarter ended March 31, 2017, which contributed to the decrease in our gross margin compared with the same period in 2016.

Operating expenses for the first quarter ended March 31, 2017 were RMB13.8 million or US$2.0 million, which was RMB1.2 million, or 8.0% lower than the same period in 2016. This decrease was mainly due to the decreased allowance for doubtful accounts receivable.

Net loss attributable to the company during the first quarter ended March 31, 2017 was RMB12.2 million or US$1.8 million compared to net loss attributable to the company of RMB12.1 million during same period in 2016.

Basic and diluted net loss per share was RMB3.72 or US$0.54 and RMB3.69 for the three-month period ended March 31, 2017 and 2016, respectively. Total shareholders' equity was RMB253.3 million or US$36.8 million as of March 31, 2017, compared with RMB265.2 million as of December 31, 2016.

As of March 31, 2017, the company had 3,265,837 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. Jiang will be happy to answer your questions. We require your patience as we translate each question and each answer. Operator, please begin the Q&A..

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] One moment please, while we poll for questions. There are no questions at this time. Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Weijia for closing remarks..

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Thank you for joining us on the conference call. We look forward to being in touch with you and we'll keep you updated about our progress..

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..