[News Space=Reporter seungwon lee] Cuckoo, which hired actor Kim Soo-hyun as its advertising model to open up overseas markets, is in an awkward situation. Due to the controversy with the late actress Kim Sae-ron, they decided to cut ties with Kim Soo-hyun and 'suspend new promotions.' 

 

It was judged that the brand image could be damaged because of Kim Soo-hyun. This means that there was a hitch in the overseas market strategy.

 

Even in this situation, the performance indicators of Cuckoo Electronics (CEO Koo Bon-hak) remained unshaken.

 

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 1st, Cuckoo Electronics' sales in 2024 grew by single digits, but its operating profit and net profit increased significantly by double digits compared to the previous year.

 

Sales in 2024 increased by 6.7% to KRW 747.9 billion from KRW 700.7 billion the previous year. In addition, operating profit increased by 26.3% to KRW 96 billion from KRW 76 billion the previous year, and net profit increased by 14.5% to KRW 87.7 billion from KRW 76.6 billion the previous year. The overseas sales ratio was 48.2%, close to half, showing the effect of hedging foreign exchange rates.

 

The debt ratio improved by 5.08%p from 27.96% the previous year to 22.88%. This is half the average debt ratio of the same industry (40-50%).

 

Cash assets also increased by 48.8% from KRW 79.4 billion the previous year to KRW 118.2 billion. There are no external borrowings, and the company has short-term financial products worth KRW 30 billion and profit-making securities worth KRW 114.2 billion, demonstrating excellent financial stability beyond stability. 

 

Profitability indicators also showed good conditions. Gross profit margin was 35.8% (33.6% last year), ROE was 18.6% (18.7% last year), and R&D investment also increased by 2% from the previous year (73.6 billion won) to 75.1 billion won.

 

However, inventory assets increased by 17.6% to KRW 65.4 billion compared to the previous year (KRW 55.6 billion), suggesting the need for management efficiency. In addition, refund liabilities related to customer returns increased compared to the previous year (KRW 3.3 billion → KRW 3.7 billion), indicating the possibility of an increase in the return rate after sales. In addition, KRW 8.8 billion was set aside for loss reserves for some receivables in transactions with special related parties, indicating concerns about the stability of transactions with special related parties.

 

A total of 457.8 million won (580 million won in the previous year) was paid to the board of directors as salary and compensation for employees. Donations were 8 million won, the same as the previous year. The executive staff consists of 4 people for Cuckoo Homesys and 5 people for Cuckoo Holdings.

 

Selling and administrative expenses amounted to 172 billion won, of which 14.8 billion won was for salaries, 10.3 billion won for commissions, 50.1 billion won for advertising and publicity expenses, and 34.7 billion won for service fees. In particular, commissions increased significantly from 8.6 billion won the previous year to 10.3 billion won, and advertising and publicity expenses also increased significantly from 40.8 billion won the previous year to 50.1 billion won. 

 

Fees paid refer to the cost of services commissioned to external experts or institutions, such as legal advice and audit fees, external service and consulting fees, and marketing and public relations agency fees.

 

Product sales amounted to 528.4 billion won, and merchandise sales amounted to 189.8 billion won.

 

Product sales are sales generated by selling goods that a company has manufactured through its own manufacturing process. In other words, when a company manufactures a product using raw materials and sells it, the sales are classified as product sales. Product sales are sales based on a company's technological prowess and production capacity, and are closely related to R&D investment.

 

On the other hand, product sales are sales generated by selling finished products purchased from outside without additional processing. When a distributor purchases and sells finished products from other companies, the sales are classified as product sales. In other words, product sales depend on sales force and distribution network, and profitability is often lower than product sales.

 

In relation to the performance of contract guarantees, etc., a payment guarantee of 3 billion won is being provided by Seoul Guarantee Insurance. In addition, due to the complete shutdown of the Kaesong Industrial Complex, 8.4 billion won in economic cooperation project insurance and damage relief funds were received from the Korea Export-Import Bank. However, the insurance money must be returned if the Kaesong Industrial Complex is restarted and the business is resumed.

 

As of the end of 2024, Cuckoo Electronics has been sued in a total of three lawsuits. 

 

The first is a lawsuit for damages by an individual (Suwon District Court) and the amount in dispute is 514.58 million won. The second is a lawsuit for compensation for damages filed by Meritz Fire & Marine Insurance (Seoul Central District Court) and the amount in dispute is 38.12 million won. The third is a lawsuit for damages by an individual (Ulsan District Court) and the amount in dispute is 677.16 million won.

 

In particular, regarding the damages lawsuit at Suwon District Court, Cuckoo Electronics has set aside approximately 385.25 million won in reserve liabilities to reflect the possibility of losing.

 

A Cuckoo Electronics official said, "It is difficult to give specific details about the three lawsuits. However, we believe that the results of the lawsuits will not have a significant impact on the operating, financial, and management status of the affiliated company." 

 

As the dividend per share increased from KRW 5,000 in the previous year to KRW 5,500 (1,100% based on the face value of KRW 500), the total dividend payment also increased from KRW 25 billion in the previous year to KRW 27.5 billion.

 

Cuckoo Electronics explained, "We have steadily increased our dividend payments recently, and this is part of our dividend expansion policy in line with our mid- to long-term dividend policy to enhance shareholder value." The company added, "The dividend is the amount disposed of from Cuckoo Electronics' undistributed retained earnings, and the undistributed retained earnings carried forward to the next year were reported to be 35 billion won."

 

The shareholders of Cuckoo Holdings are Koo Bon-hak (CEO) 45.11%, Koo Bon-jin (owner family) 15.22%, Cuckoo Holdings (treasury stock) 12.61%, Koo Gyeong-mo (owner family) 3.15%, and Cuckoo Social Welfare Foundation 1.37%. The combined stake of the owner family and Cuckoo Holdings amounts to approximately 63.5%, which is effectively a structure in which the owner family exercises management rights. Treasury stocks are used as a means to secure liquidity within the company and defend management rights.

 

Entop supplies rice cooker parts to Cuckoo Electronics, and a significant portion of its sales are generated through internal transactions. This provides a source of dividends, which are then distributed to the owner's family. In other words, the high dependence on internal transactions can potentially pose a risk to external stakeholders, raising concerns about transparency and fairness.

 

CEO Koo Bon-hak receives dividends from both Cuckoo Holdings and Cuckoo Homesys. 

 

CEO Koo is the largest shareholder with a 45.11% stake in Cuckoo Holdings and will receive 19.2 billion won in dividends. He also owns a 20.53% stake in Cuckoo Homesys and will receive 4.6 billion won in dividends. 

 

A Cuckoo official stated, “Cuckoo Electronics is 100% owned by Cuckoo Holdings, so CEO Koo Bon-hak does not receive any dividends. The total dividends he receives from Cuckoo Holdings and Cuckoo Homesys is 23.8 billion won,” and “Entop is neither a subsidiary nor a subsidiary.”