Good afternoon. My name is Jae-ha Shin, Vice President of APR Corporation. I would like to express my profound gratitude to all our shareholders for joining our earnings call. Today's presentation will proceed in Korean first and followed by English. Lastly, Q&A session will begin after English interpretations. Before getting into the presentations, the information included in this presentation material is prepared and provided for the convenience of shareholders and investors as a reference. The financial information and data have not yet been audited from the external auditors and may cause some modifications during the final audit. Also, the forecast or the forward-looking statements of information may change due to the changes in market conditions and modifications of strategic planning. [Non-English content].
Before we proceed with the detailed earnings presentations, I would like to provide a summary of the key highlights for the fourth quarter of 2024. Please refer to page three. APR is committed to becoming Korea's leading global K-beauty company. In the fourth quarter of last year, both cosmetics and beauty device divisions achieved remarkable growth, leading to record high earnings. Building upon the momentum from 2024, we anticipate even stronger growth in 2025, particularly in the U.S. and other global markets. Looking at our cosmetic performance, it is evident that APR is not just a company with strength in beauty devices, but also one of the most dynamic and high-growth players in the K-beauty industry. Last year, we accumulated significant experience and established a robust data foundation which contributed to meaningful top-line growth.
As evidenced by our fourth quarter results, our sales have expanded substantially, and we expect this momentum to continue into the first quarter of this year, 2025. In our cosmetic divisions, we are seeing exceptional growth in cost competitiveness, category leadership, and brand awareness. Additionally, B2B sales are increasing significantly, contributing to improvements in our operating profit margin. Our beauty device division continues to experience strong growth, particularly in our flagship product lines. Contrary to concerns that the beauty device market may be slowing, we recorded nearly 50% growth last year. For 2025, we plan to launch three to four new products while expanding into new overseas sales channels, which we expect will drive continued high growth next year as well. Furthermore, our medical device business is progressing according to our plan. In the fashion segment, we believe the market will not deteriorate further.
Since 2024, inventory turnover period has improved, and we recognized most of our inventory provisions or allowance last year. By significantly reducing our order volumes for 2025, we anticipate a substantial improvement in operating loss compared to the previous year. Now, I may start the presentations by announcing our financial performance for the fourth quarter of 2024. You may refer to page four, Overall Sales Trend. We achieved record-breaking sales growth through continued global expansion, further strengthening and solidifying our position as a game changer in the beauty industry. For the fourth quarter, we recorded consolidated sales of KRW 244 billion, once again setting a new all-time record for the quarterly sales.
The fourth quarter has consistently been our strongest period in terms of sales growth each fiscal year. Also, our sustained growth across all quarters enabled us to achieve continuous YOY growth for the 40 consecutive quarters since our founding in 2014. On an annual basis, following our milestone of surpassing KRW 500 billion in the sales in 2023, we have now exceeded KRW 700 billion in 2024, marking another year of explosive growth. The following pages will provide a more detailed overview of our performance in the fourth quarter. It's page five, fourth quarter results. For the fourth quarter, our consolidated sales reached KRW 244 billion, recording a YOY growth of 60% and marking the highest quarterly sales in our business history.
Both beauty devices and cosmetic division surpassed KRW 100 billion in sales, achieving a significant milestone of exceeding KRW 200 billion in quarterly sales for the first time. Especially, our cosmetic division delivered an outstanding performance, recording an exceptional 103% YOY growth. This remarkable achievement was driven by the accelerated global expansion of Medicube brand, led to enhanced global brand awareness. Our fourth quarter's operating profit was around KRW 40 billion, a 15% growth in YOY, and net profit reached KRW 42 billion, a 74% growth in YOY. On an annual basis, sales reached KRW 723 billion, resulting in YOY growth of 43%. Operating profit increased by 18% to KRW 123 billion, while net profit increased by 30% to KRW 106 billion. Last year, the fashion business division recorded an operating loss of approximately KRW 16 billion, which means that the profitability of beauty division was significantly stronger in the comparison.
The growth in the net profit was driven by the increase of over KRW 10 billion in interest income from financial instruments and also investment gains from divestment of equity investments, resulting in higher non-operating income. These factors contributed to exceeding KRW 100 billion in annual net profit, achieving a 30% YOY growth. In line with our strategy priorities, we will continue to focus on top-line growth in 2025, following our momentum from 2024. By strengthening our global competitiveness, we aim to drive sustainable profitability and establish ourselves as a leading global beauty company. It's page six, our fourth quarter results by divisions. Beauty device division recorded the sales of KRW 103 billion, resulting in YOY growth of 47%. Beauty device division sets new record for both sales volume and sales by selling approximately 580,000 units and recording over KRW 100 billion.
Strong sales growth was sustained through the U.S. market and B2B exports, with particularly strong performance on Amazon during the Black Friday promotion period, where our flagship product, Booster Pro, secured top ranks, reaffirming its growth potential in the global market. In the domestic market, we launched the Booster Pro Mini, a cost-effective and entry model in November to enhance accessibility and expand our targeted demographic group to the younger 10 and 20 segments. Moving on to the cosmetic division. Cosmetic division recorded the sales of KRW 116 billion, resulting in significant YOY growth of 103%. Medicube Cosmetics demonstrated strong expansion momentum, not only in the domestic market but also global markets, particularly in the U.S. and Japan.
We have strengthened its product line-up with PDRN-based skincare, enhancing overall product competitiveness. As a result, Medicube Cosmetics achieved KRW 97 billion in sales, marking an explosive YOY growth of 141%. APRILSKIN also exhibited solid growth both in domestic and overseas markets, with sales increasing by 24% YOY, positioning itself as the next global brand following Medicube. In the others divisions, Nerdy experienced a sales reduction due to the termination of its distribution agreement in China. However, growth in Photogray, a self and instant photo studio brand, helped maintain overall sales at a level comparable to its previous year. It's page seven, fourth quarter sales by regions. Following the strong sales growth in third quarter, our overseas sales continued to demonstrate remarkable growth in the fourth quarter.
Overseas sales reached KRW 156 billion, marking a YOY growth of 135%. We are building on the milestone of surpassing KRW 100 billion in the third quarter, and our overseas sales further grew, exceeding KRW 150 billion in fourth quarters. Driven by this robust growth, the proportion of overseas sales rose from 44% to 64%. Further details about our regional performance will be demonstrated on the following page. It's page eight, fourth quarter results by regions. We continue to strengthen our global competitiveness by maintaining YOY growth across all overseas markets except for China. Especially in U.S. and Japan, we expanded our sales channels through other online platforms such as Amazon and Qoo10, thereby broadening our local customer pool while simultaneously enhancing global brand awareness.
The strong sales performance in these key leading markets accelerated our expansion into new markets through B2B exports, which resulted in an unprecedented quarterly YOY growth of 1,171%. Breaking down our performance in two regions. First, Korea, sales reached KRW 88 billion, reflecting a 3% YOY growth. In United States, sales surged to KRW 69 billion, marking a significant YOY growth of 131% and breaking another quarterly sales record. During the Black Friday promotion, our key products were marked top rank in their respective categories, resulting in visible growth in 182% in our cosmetic divisions. Moving on to Japan, sales grew to KRW 18 billion, reflecting a significant YOY growth of 125%.
During the Qoo10 Mega Wari promotion in November, Medicube ranked second in overall sales performance. Additionally, cosmetic sales achieved explosive YOY growth of 343%. In China, sales declined to KRW 5 billion due to the termination of our exclusive distribution agreement for the Nerdy brand, which led to a sales decrease in fashion divisions. Hong Kong reached KRW 21 billion for sales, marking a significant YOY growth of 143%.
The offline pop-up store held in December further reinforced Medicube's strong brand awareness in Hong Kong market. Singapore, Malaysia, and Taiwan regions are included in other segments, and the combined sales for these regions reached KRW 14 billion, resulting in high double-digit YOY growth of 71%. Lastly, B2B exports sales surged to KRW 30 billion, achieving an extraordinary YOY growth of 1,171%. Our expansion into additional European markets contributed to this remarkable performance. Moving on to page nine, strategy global expansion. Over the past year, we accomplished record-breaking results in the U.S. market, and we expect this strong momentum to continue.
Our U.S. sales doubled from KRW 30 billion in 2022 to KRW 60 billion in 2023. In 2024, we achieved over 160% growth, reaching approximately KRW 160 billion. APR's growing presence and brand awareness in U.S. has extended globally, leading to surge in B2B sales through overseas distributors and retailers. In 2024, our overseas B2B sales reached KRW 60 billion, demonstrating exceptional growth. For 2025, we forecast a threefold increase in B2B sales compared to last year.
As we move forward into 2025, we will not only maintain our strong growth in U.S. and B2B regions, but also pursue an aggressive global expansion strategy. Moving on to Japan, Medicube officially entered the offline retail sector in January 2025. Based on industry benchmarks from peer companies, the offline sales contribution is projected to account for approximately 30%- 50%, supporting our expectations for additional growth. Our goal for Medicube is to secure placement in 3,000 stores across Japan by the end of this year, 2025. We are also advancing our expansion into the European market, and we have successfully obtained CPNP certification for our key products, granting us access to all 27 member nations of EU. These certifications will allow us to accelerate our market entry across Europe.
Lastly, we are actively expanding into high-growth emerging markets, including Middle East and Southeast Asia, to strengthen our global footprint. If I move on to page 10, rapid growth in cosmetics, U.S. success, and global market expansion. We successfully accelerated our overseas expansion, broadening brand awareness in global markets and achieving remarkable growth. As a result, our quarterly cosmetic sales surpassed KRW 100 billion for the first time. The strong performance of our cosmetic division is also reflected in the increasing number of products, ranking among the top sellers on global e-commerce platforms such as Amazon in U.S. and Qoo10 in Japan. For more detailed information, one of key products, the Zero Pore Pad, has solidified its position as a global steady seller item. While new hero products such as Collagen Night Wrapping Mask and Zero Exosome Shot have rapidly gained customer attention.
Fueling the momentum of our cosmetic business and driving explosive sales growth. To further accelerate our global expansions, we plan to broaden our SKU portfolio, introducing additional hero products and launching differentiated new products tailored for key markets such as U.S. and Japan. Additionally, we will strengthen Medicube's PDRN lineup, positioning the brand as a leading symbol of PDRN category. If I move on to page 11, key highlights. First is our inclusion in the KOSPI 200 index. Back in December, APR was newly added to the KOSPI 200 index, which took less than a year after our listing to KOSDAQ markets. Moving forward, we are committed to establishing ourselves as a trusted company that represents the industry and upholds its credibility.
Next is the share buybacks and cancellations. As part of our shareholders' return initiatives, we executed share buybacks that are approximately KRW 60 billion worth of common shares in 2024 and canceled the entire amount in January 2025. Additionally, on February 4th, we announced an additional share buyback of KRW 30 billion. Given the increment of this market volatility driven by domestic and global political and economic uncertainties, we remain dedicated to enhancing shareholders value through proactive measures and initiatives. Last is our participation in CES 2025. To expand our global network, APR has participated in CES for two consecutive years, and this year we welcomed over 1,000 visitors, marking a more than 70% increase from the previous year.
This significant growth reaffirms the rising global presence of K-beauty and the increasing brand awareness of our brand, Medicube, within the industry. Moving on to page 12, this is a summary of our consolidated financial statement, and you may refer to this page at your convenience. Now let me outline our 2025 financial targets. For this year, our management has set an annual sales target of KRW 1 trillion with an operating profit of approximately KRW 170 billion- KRW 180 billion, representing an operating margin of 17%- 18%. This target aligns closely with last year's profitability level. The stated targets exceed the current consensus in the capital market while sales mix dynamics continue to evolve, and we are more confident in our performance this year compared to last year.
Moving forward, APR remains committed to upholding its position as a leading K-beauty company, ensuring transparent communications with our shareholders. This is the end of our presentations, and now we can move on to the Q&A session. Thank you.
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[Non-English content] . Now Q&A session will begin. Please press star one. That is star and number one if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two. That is star and number two on your phone. [Non-English content] . The first question will be provided by Im Heejin from Citi Securities. Please go ahead with your questions.
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I have three questions. First of all, could you share the basis of this KRW 1 trillion revenue guidance broken down by device and cosmetic segments? Secondly, regarding global expansion, please provide specific plans for Europe. Lastly, on cost, how did marketing expenses and logistics costs compare to revenue this time?
Regarding the guidance, when we first established our 2025 guidance, we were determining whether we should approach it cautiously or we should provide more aggressive or challenging guidance to the capital markets. We ended up deciding to deliver more challenging and aggressive guidance to the market. Under this guidance, we have to record an additional KRW 300 billion and also an additional 40% YOY growth in terms of sales. As of a rolling basis for the first quarter this year, we are quite confident that we will be able to deliver some more positive outcomes for the coming quarters and the end of this year as well. Regarding some concerns about the tariff rate and the exchange rate, those two factors are something that we cannot control.
However, our business statuses are going very well as of now. We are quite confident that our fourth quarter results will be quite positive. Regarding the sales by regions, On business divisions, we think that the sales proportions for beauty device and cosmetics will maintain the similar number, but we think the cosmetic division will be slightly higher, and the next will be the beauty devices. When it comes to the region, especially for Europe, we will be able to deliver more detailed strategies and information in the coming time.
As of now, we are preparing to expand our sales channels that are commonly known in European markets, and also we are preparing to enter some offline channels. Lastly, we will be utilizing more the B2B partners that are commonly known in European markets. Regarding the expenses and some logistic fees, for our marketing expenses for the fourth quarter, its proportion was around 70% from the total sales. For the logistic fees, it was about late 8%. It has been decreased relatively to the third quarter last year, 2024. When we take into account our overseas sales proportion is continuously increasing, we don't think that the logistic fee will recover onto our first or second quarter level, but it will be maintaining around the similar number as our fourth quarter.
One of the key factors that our SG&A increments is because of our aggressive expansions to the U.S. market, starting from the end of the second quarter last year. This is the end of the first question. Maybe we can go on to the second question.
[Non-English content] . The following question will be presented by Shin Dong Cheol from CLSA. Please go ahead with your question.
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I have three things to ask. First, regarding our guidance, exchange rates may decline. So I'd like to know what exchange rate assumptions were considered when setting this year's target. Additionally, our dependence on Amazon is increasing. So what was Amazon's share of U.S. sales in the first quarter, and what is the target for this year? Lastly, regarding the four new products launching this year, in which regions will they be released? What types of products are they, and what will their price range be?
Regarding the exchange rate, actually, our management executives are considering our exchange rate more conservatively. As of now, our exchange rate is about KRW 1,450, but internally, we are considering our exchange rate below KRW 1,400. It is somewhat true that the exchange rate helps our sales, but still, we are taking our exchange rate more conservatively. For Amazon, the sales proportions for the fourth quarter, its sales proportions for the Amazon channel in the U.S. market takes about 50%, and the rest is from our D2C channel and TikTok Shop. It's not confirmed yet, we are also considering to enter the new sales channels as well. In this regard, we are expecting that the sales proportion for Amazon will be lower in the coming quarters.
For the product launch, as of now, it is quite confidential to deliver more detailed information about the new product. But in terms of features, it will be some upgraded version of the existing device lineups that we are currently selling. This is the end of the second question, then we can move on to the next questions. Thank you.
[Non-English content] . The following question will be presented by Park Eun-jung from Hana Securities. Please go ahead with your question.
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First, while our cosmetics and device business are both performing well, could you roughly break down the profit margins for each segment in the first quarter? Second, for our key markets, Korea, U.S., and Hong Kong, how do profit margins in Korea, U.S., and Hong Kong compare to the average in this quarter? Third, North America performance was impressive. Could you break down the revenue share of cosmetics and devices in North America? Also, what was the percentage of device sales within the North American market? Fourth, as we expanded through Amazon, could you share the first quarter Amazon revenue and its growth details? Additionally, could you provide a rough estimate of how much growth is possible on Amazon by 2025? Furthermore, how much was our marketing expense, specifically for North America?
Firstly, regarding the operating profit margins for specifically cosmetics and devices. For devices, its average OP margin is around 20%, and the Medicube cosmetic is around 20% as well. For other cosmetics, for example, like Forment or Glam.D Bio, APRILSKIN, its OP margin is around early to mid 10%. By adding them up, roughly the entire cosmetic division, the OP margin is around the late 10%, so around 18% to 19%. Regarding the OP margins for the region, specifically in Korea, U.S., and Hong Kong, as of now, it's quite hard to break down our OP margins more specifically in regions. We will be able to deliver this information next time. For the device sales volumes for North America, specifically in the U.S., for the fourth quarter, we sold about 192,000 units.
When we take into account that our sales volume in the first quarter was around 48,000 and the second quarter was about 40,000, there has been some big increments regarding the sales volumes in the U.S. region. Also recently, there has been some facial policy or the policies, the issues have been brought up for the Booster Pro in the U.S. through TikTok. APR recently had a lot of academic papers relating to the medical purpose. Once we noticed about these issues, we've strictly announced our announcement regarding this issue. We don't think there will be any noticeable impact on our business. For the sales proportions for Amazon for the fourth quarter, in the previous time, it was about 20%, but as mentioned previously, its sales proportions for Amazon as of the fourth quarter is about 50%.
There are some cases where these sales proportions for Amazon actually vary by quarter, especially during the promotions or the seasonal factors. Regarding our D2C channel proportions, actually, it's been lower compared to its peak, but still it's consistently recording about KRW 4 billion- KRW 5 billion monthly. Also for the marketing expenses specifically for the U.S. region, the entire budget for our marketing expense relative to our sales is about 20%, but in the U.S. it will be slightly higher because in the U.S., specifically for Amazon, its competition rate is relatively higher. The competition rate specifically in the Amazon channel is also increasing. It will be relatively higher than other regions. This is the end of question three, and maybe we can move on to the next questions.
[Non-English content] . The following question will be presented by Park Hyun-jin from Shinhan Investment Securities. Please go ahead with your question.
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Sales performance has been excellent and logistics costs have decreased compared to the third quarter, while advertising efficiency has improved. In which areas did additional costs arise? Regarding sales channels, how much improvement has there been in the B2B segment? Lastly, for 2025 operating profit, which cost categories do you plan to reduce to achieve your target?
Firstly, about our OP margins, specifically which expenses are impacting largely for our reduced OP margins relative to the past quarters. It's not only one or two issues, it's more like comprehensive issues. Firstly, our sales commission has been increased about 3%- 4% point relative to the third quarters. Secondly, it's our logistics fees. Even though the logistics fee has been decreased compared to the third quarters, it's not noticeably decreased. One of the key factors is that because of the steep sales growth in our cosmetics, especially in U.S. regions, it was inevitable for us to use the air to maintain the inventory level for our cosmetics. We are still also using the air because there has been some steep sales increments in cosmetics as of still now in the U.S.
For that region, we are expecting that our logistics fee will maintain around the similar level as of now. Another factor was the Nerdy brand. As of now, the accumulated level of the inventory, the allowance or the provision was around KRW 6 billion, and it actually impacted negatively on our margins. Lastly, the reason why we are expecting some improvements on the OP margin is because of the increments in our B2B sector. While it is true that our B2B sector has been increased significantly during the fourth quarter, it was mainly occurred during December, so the absolute timeline was quite short, and that's one of the reasons why our OP margin forecast will improve on a long-term basis because our B2B segment is increasing at a rapid pace.
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Once again, I would like to express my profound gratitude to all shareholders for joining our earnings call. Every one of us in APR will continue to strive for sustained growth through constant and absolute efforts. We kindly ask for your continued interest, encouragement, and support. Thank you for listening, and this is the end of earnings presentation for the fourth quarter of 2024. Thank you.