Cuckoo Electronics Co., the South Korean maker of the household rice cooker brand, continues to struggle from sagging sales of its mainstay cookers at home and in China as the result of consumers shunning Korean products over a diplomatic spat concerning a controversial missile shield, but may be bottoming out through the help of its rental business.

Analysts forecast another gloomy quarter for the South Korean company. According to data provider FnGuide on Thursday, Cuckoo Electronics’ consolidated operating profit in the July-September period is projected to be 22.2 billion won ($19.6 million), down 6.7 percent from a year earlier. Sales are estimated to rise 5.7 percent on year to 186.1 billion won. Net profit would be down 2.7 percent to 18.2 billion won.

But it may be bottoming out after its dismal performance in the second quarter. Operating profit in the quarter ended June plunged 32 percent on year, missing market estimates by a wide margin.

Sales have slumped from a sharp drop in Chinese consumers following a diplomatic row over Seoul’s deployment of a U.S.-backed anti-missile system, which Beijing opposes for national security reasons. The diplomatic standoff is likely to continue weighing on the firm as the conflict shows little sign of easing.

Some analysts are suggesting that a corporate reshuffle, to be completed by the end of the year, may help the troubled firm get back on its feet. Cuckoo Electronics plans to spin off its businesses and create Cuckoo Homsys from the rental unit and Cuckoo Holdings from the investment unit, with both companies to be relisted next January. Cuckoo Electronics would engage solely in home appliances and become an unlisted subsidiary.

But the stock performances of the demerged companies would likely diverge given their business outlook. While sales prospects for the rice cooker remain dim, with second-quarter earnings down 72 percent on year, the rental business of air and water purifiers is posting solid growth, its operating profit up 17 percent year-on-year in the January-July period.

“The worst may be over Cuckoo as it appears to have entered the recovery phase,” said Cho Sang-hoon, analyst at Samsung Securities Co. “Investors should keep their eyes open for possible signs of a turnaround later this year.”

Shares of Cuckoo Electronics closed Friday down 0.38 percent at 131,000 won.

By Ko Min-suh

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]