Weijia Dai - Investor Relations Yong Jiang - Corporate Secretary.

Greetings, and welcome to Fuwei Films’ Fourth Quarter and Full Year 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 Ms, Weijia Dai. Thank you. You may begin..

Thank you. Let me remind you 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, 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 provision 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, Fuwei Films 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..

Welcome to Fuwei Films’ fourth quarter and full year 2017 financial results conference call. We continue to face strong competition from emerging and incumbent players, which created over supply relative to demand in a marketplace in 2017.

While this has impacted Company's financial results, we are pleased to announce that our sales volume for specialty films has continuously increased.

We believe that our focus on continued innovation and R&D will enable the Company to expand end user applications in our high end specialty films, while improving the product portfolio, which we believe will help us to attract new clients and expand relationships with existing new 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, Weijia will read to you our financial results for the fourth quarter and full year of 2017. And I’ll be ready for the Q&A session..

Now, I will provide you with an overview of Fuwei Films key financial numbers for the fourth quarter and full year 2017. Then I will review some of the operational highlights, and then we will open up the call for Q&A.

Revenues for the fourth quarter of 2017 were RMB78.8 million or $12.1 million compared with RMB70.9 million in the fourth quarter of 2016, an increase of RMB7.9 million or 11.1%. Sales volume accounted for a decrease of RMB2.8 million, while the increase of average sales price caused an increase of RMB10.7 million.

Sales of specialty films for the fourth quarter of 2017 were RMB32.3 million or $5 million, or 40.9% of total revenues compared with RMB28.1 million or 39.7% of total revenue in the fourth quarter of 2016. The increase was mainly attributable to the increased sales volume compared to those in 2016.

Overseas sales for the fourth quarter of 2017 were RMB11.3 million or $1.7 million, or 14.4% of total revenues compared with RMB6.7 million or 9.5% of total revenues in the fourth quarter of 2016. Sales volume accounted for an increase of RMB3.2 million, while the increase of average sales price caused an increase of RMB1.4 million.

Gross profit for the fourth quarter of 2017 was RMB11.6 million or $1.8 million, representing a gross margin of 14.7% compared with a gross margin of RMB5.5 million, representing a gross margin of 7.7% in the fourth quarter of last year.

Operating expenses for the fourth quarter of 2017 were RMB16.7 million or $2.6 million compared with RMB17.7 million or $2.6 million in the fourth quarter of 2016. Operating loss for the fourth quarter of 2017 was RMB5.1 million or $0.8 million compared with an operating loss of RMB12.3 million or $1.8 million in the fourth quarter of 2016.

Net loss attributable to the Company for the fourth quarter of 2017 was RMB10.1 million or $1.6 million compared with net loss attributable to the Company of RMB18.8 million in the fourth quarter of 2016.

Basic and diluted loss per share was RMB3.10 or $0.48 compared with basic and diluted loss per share of RMB5.76 or $0.83 in the fourth quarter of 2016. Now, moving onto the full year results.

During the fiscal year ended December 31, 2017, net revenues were RMB290.7 million or $44.7 million compared to RMB253.9 million during the same period in 2016, representing an increase of RMB36.8 million or 14.5%.

For further analysis of the factors causing revenue increase, the increase of average sales price caused an increase of RMB32.0 million and the sales volume factor made an increase of RMB4.8 million.

In 2017, sales of specialty films were RMB108.1 million or $16.6 million or 37.2% of our total revenues as compared to RMB96.1 million or 37.8% in 2016, which was an increase of RMB12.0 million or 12.5% as compared to the same period in 2016. The increase was due to increased sales volume.

Overseas sales were RMB55.6 million or $8.5 million or 19.1% of total revenues compared with RMB41.8 million or 16.5% of total revenues in 2016. The further analysis of factors causing overseas sales increase, the increase of average sales price caused an increase of RMB5.5 million and sales volume factor made an increase of RMB8.3 million.

Our gross margin was 9.3% for the year of 2017 as compared to the gross margin of 7% in 2016. Gross margin increased by 2.3 percentage points compared with the same period in 2016. Our average unit sales price increased by 12.3% compared to last year. The unit sales cost increased by 9.5% due to the price increase of main raw materials.

Consequently, the increase in sales price exceeded cost of goods sold per unit in product during 2017 compared with 2016, which contributed to the increase in our gross profit. Our operating expenses during the year ended December 31, 2017 were RMB61 million, an increase of RMB1 million or 1.7% as compared to 2016.

Total other expense is a combination result of interest income, interest expense and other income. Total other expense during the year ended December 31, 2017 was RMB11.3 million or $1.7 million compared to total other expense of RMB6.9 million in 2016. This is mainly attributable to the increased interest.

Income tax expense during the year ended December 31, 2017 was RMB0.8 million or $0.1 million compared to an increased tax expense of RMB5.3 million during 2016, which was mainly attributable to tax effect changes in deferred tax during 2017.

We only recognized deferred tax assets for the loss of 2017 after considering the possibility of realizing the benefits under the conservatism principle. Net loss attributable to the Company for the full year 2017 was RMB46 million or $7.1 million compared with a net loss of RMB54.5 million in 2016.

Net cash provided by operating activities was RMB10.8 million for the year ended December 31, 2017 as compared to net cash used in operating activities of RMB23.2 million for the year ended December 31, 2016. Cash and cash equivalents on December 31, 2017 was RMB12.96 million or $1.99 million compared with RMB13.3 million as of December 31, 2016.

Basic and diluted loss per share for the year ended December 31, 2017 was RMB14.09 or $2.17. Now, let me give you some highlights on Fuwei Films cash position. As of the end of 2017, total shareholders' equity was RMB221.02 million or $32.97 million compared with RMB265.2 million as of December 31, 2016.

Working capital as of December 31, 2017 was an inactive RMB172.93 million, which is inactive $26.58 million compared with working capital of inactive RMB170.1 million as of December 31, 2016. 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 transfer each question and then answer. Operator, please begin the Q&A..

Operator:.

Thank you for joining us on this conference call. Fuwei wishes to thank to its shareholders, customers and employees. We’ll look forward to being in touch with you and keep you updated about our progress..

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