Hello, everyone, and a warm welcome to Stora Enso's Q4 and Full Year twenty eighteen Financial Results Presentation. A special welcome also to those of you who are joining us via the webcast. My name is Ulrike Alilia. I'm Head of Communications. And today's presentation will, as always, be given by our CEO, Karl Henriksundstrom and our CFO, Seppo Parvi.
And after the presentation, we will open up for a Q and A session. And for those of you who are joining us via the web, you can ask your questions online. And with that, I hand over to you, Kalle.
Thank you, Enrique, and good morning or maybe good afternoon depending on where you are in the world. So I will go through the fourth quarter twenty eighteen plus which is also the full year 2018. I will start with the headlines. And the headlines describes very well what has happened. We have had eight consecutive quarters of growth.
And this quarter, we grew over 6% if you exclude divested Puma Market. However, the EBIT decreased. And the reason why the EBIT decreased was basically two main reasons. We had a bit of a softer market coming in November and December and then we had six mills with operational problems causing €40,000,000 in EBIT loss. All in all, sales volume declined 11,000,000 and 40,000,000 from the six mills.
But despite that, we were also coming in with an EBIT above 10% for the six consecutive quarters. EPS increased 75%. Cash flow was a bit on the light side, partly because of built up of working capital. We continue to strengthen the balance sheet and the operating return on capital employed came down slightly below the 13%. The reason why what happens in Q4 is these two events.
Volumes, quite a bit softer market towards the November, December and then the six mills. The six mills are two mills in Biomaterials, Montes Del Plata as well as Kutkware for various reasons, causing about €20,000,000 of the €40,000,000 Then we had Nymola, as you were aware of, we warned because of the water level, plus that we had a problem with the Weizelote pulp mill. That was together 16,000,000. And then we had 4,000,000 from Foz and Imatra. All these mills are up and running now, but these are things that happens in a process industry.
I wish it wouldn't have happened, but it happened. But now we need to look forward. The other part that is a very important thing is that we for the fourth consecutive year, we are increasing the dividends and we're proposing to increase the dividends. So the Board will propose to the AGM a €05 per share, which is a proposed increase of 22%. We have been increasing double digit increases of dividends for four consecutive years.
One of the parts that I feel very, very proud about is that we managed to take the return on capital employed for the full year well above the targeted level of 13%. Last time we were at this level, we're at year 2,000. So it's taken eighteen years to get to where we are today. And you can see the development in the last years in the chart here. We today also announced a profit protection program.
And the reason for that is that we have seen costs going up. We have seen wood costs going up, chemical going up, cost for chemicals and logistic costs. Only wood costs we estimate will be around CHF 50,000,000 higher in Q1 twenty nineteen versus Q1 twenty eighteen. On top of that, we have a macro development in the world that is not very favorable at the moment, which might affect trade. So we have decided to make a cost improvement program of €120,000,000 to be conducted during 2019 and we will get the savings during 2019 and 2020.
We have also decided to take down our CapEx by 50,000,000 In the announcement today, we included proposed reductions in Imatra for PM6 also at Imatra as well as in Imavere in Estonia and ALA in Sweden. This is regretful, but we need to be proactive to make sure that we keep our competitiveness in a more uncertain world with increased costs. If you look upon some of the major events during the fourth quarter, it was a number of investments announced. We have done the biodegradable straw. We have decided to co invest with IKEA and H and M in treated textiles.
We launched the first recyclable RFID tag called ECO. We concluded the environmental impact assessment of Oulu and we divested JUNE and Balarj in Sweden. And as an important step, we also signed a binding agreement for the restructuring of Bergvik Skog. We are talking here about the sizable plot of land that will be going out from Berwick and into the balance sheet of Storrenso. We're talking in total of 1,400,000 hectares and the impact will be around 1,000,000,000 in the balance sheet of Stora Enso.
We also benefited in the net income from sale of Latvia forest land of about $47,000,000 and we also got additional value add through the revaluation of biological assets of $49,000,000 The journey that we started in 2006 of converting Stora Enso or transforming Stora Enso from a basically paper dominated company to a company more dominated by the four growth divisions continues. Today, we had we are presenting a good result for paper for the full year of 2018. However, it still is a more balanced part of our portfolio being less than 20% of our profit at the moment. So with that, I would hand over to Seppo to do some presentations of the income statement as well as the divisions.
Thank you, Karl. And I start by looking at the figures that we have just published today in our announcement. First of all, top line sales for the quarter increased 5.8% year on year and full year sales figure was €10,500,000,000 that is an increase of 4.4% year on year. Operational EBITA margin was 15.3% and Operational EBITA €271,000,000 or 10.2%. Full year operational EBIT was 1,325,000,000 and that is increase of 32% compared to year before.
And net profit for the period was EUR988 million and that is an increase of 61% compared to 2017. Earnings per share €1.28 and operational return on capital employed for the full year: 15.5%, above the 13% target that we have for return on capital employed. Then moving to divisions and I start with Consumer Board, where challenging market conditions continued. And we had increased and achieved price increases. This is now actually second quarter in a row.
We already started to increase prices during the Q3. Sales increased slightly to record high Q4 and that was EUR637 million. That's thanks to higher local prices having EUR10 million positive effect, but that was offset by lower volumes. Operational EBIT decreased €45,000,000 to €24,000,000 That was negatively affected by significantly higher variable costs, especially when it comes to wood, pulp and chemicals, like we already have mentioned earlier last year. Garden board production was lower and we had some operational issues and challenges at Imatra and Forge Mills and those had negative impact on profitability.
Return on capital employed was 5% during the quarter. Then moving to Packaging Solutions, where we continue with record sales and profitability. Sales increased 5% to all time high of EUR352 million. Their improved prices and active sales mix management in European based operations had positive effect on the result and sales line. Total Containerboard deliveries were stable.
Operational EBIT increased to record high for Q4 and that was €59,000,000 We had clearly higher sales prices and good mix management in European based operations, but that was offset by lower sales volumes in China. Also higher raw material costs overall had some negative effect as well as some spare part write offs that we are taking. Operational return on capital was at 25.7% and that is significantly above the long term target of 20%. This is driven by improved profitability in our Packaging Solutions business. Then moving to Biomaterials division, where good market continues despite signs of price pressure.
Sales increased 14% to another all time high of €415,000,000 and that's thanks to higher sales prices even though that volumes were slightly lower. Operational EBIT was at record high for Q4 at €91,000,000 that's an increase of €30,000,000 Their higher pulp prices were partly offset by higher variable costs, especially wood and energy costs. And we had some production issues at Montes De Plata mill and Skutscheir mills during the quarter. Operational return on capital at the strategic target level of 15% for the quarter. And our Linear by Stouranza was awarded for Innovative Products Award 2018 by Institution of Chemical Engineers, another proof point for the successful R and D work that we have been doing in Stora Enso during the past years.
Then moving to Wood Products division, where we had another record quarter. Sales excluding divested PuMerke increased 3.5%. That is thanks to improved sales prices in Classic Sawn. And operational EBIT was up 66% to record high Q4 of €42,000,000 Clearly higher and better prices improved mix partly offset by higher fixed costs related to increase in operations. Operational return on capital continued at record level at 27.1%, also clearly above the strategic target of 20%.
And our latest investment in CLT at the Gruver Sawmill is being completed at the moment and we expect to start the commercial production during the quarter that just has started. Then moving to our Paper division, where we had solid quarter impacted by some operational challenges. Sales increased 5% to €761,000,000 Clearly higher sales prices in all grades and better mix were partly offset by lower sales volumes. Operational EBIT was stable at €45,000,000 That's singularly higher sales prices in all grades. They were partly offset by higher variable costs, especially in wood, pulp and chemicals.
And like Karl mentioned already, we had production reductions caused by water shortage at the Nyumoller mill in Sweden and we had some technical issues on Propessat Weitzel water pulp mill. And those had €16,000,000 negative effect on the result. Also we had to take some market curtailments at Olumil due to softness of the coated woodfree market. Cash flow after investing activities to sales ratio was 2.5%. That was negatively impacted by temporary working capital challenges.
Here it's good to remember that Q3 cash flow was very strong, that was 8.3% to net sales, so the two quarters together were above 5%, but still behind the targeted 7% level. Then to summarize our strategic targets where we stand there and we can still see some more potential, even though that most of the targets are on green. We still have three, four that are red or yellow. We still need to work with the fixed cost to sales ratio to bring it to targeted 20% level or below. We were at full year figures at 23.6%.
It's moving to right direction. Year ago, we were at 25.1%, but we need to put focus there. And today, announced profit protection program is one way to address this also going forward. But of course, we also need to work on the top line growth. Operational return on capital for the quarter that we reported today was 12.4%, below the 13% level we target, not much but still below, but full year as said already at 15.5%.
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the divisions and division targets: Consumer Board for the quarter at 5% and for full year at 11.9 below the targeted level mainly because of the reasons we have also mentioned earlier, we still need more time to increase prices to match the cost increases that we have faced during the past year. Packaging Solutions, clearly above the targeted level at 27% for the full year, 25.7% for the quarter. Also biomaterials for the quarter at 15%, exactly at the targeted level and full year at 17.9 And Wood Products continues a strong performance, having reached now 27.1 level for the quarter and 28.1% for the full year result. And that's clearly also about the 20% targeted level. And paper cash flow, like I already mentioned, 2.5% for the quarter and full year at 5.7%, slightly better than year before, but like said, slightly also below the targeted 7% level still.
But like we mentioned I mentioned earlier, now we believe that this is a temporary hiccup in Q4 and we are confident that now during the year that has started, the cash flow in Paper division will be back on track. With that, I hand back to you, Karl.
Thank you, Seppo, for your description of the full status of the company and the divisions. So as of this year, we have decided to give out an outlook, which is our best view how the full year is going to look like. So for 2019, we expect to be largely in line with 2018, providing that the current trading conditions do not significantly change. Demand growth is expected to continue for Stora Ensos, all other business except European paper for which we estimated demand declined. So we expect sales to be higher.
We also see costs being higher and that's the reason why we are launching the profit protection program, but also to deal with the uncertainties in the macroeconomic environment. We have also chosen to change the guidance for the next quarter and not using adjective, but more give a numerical range. And we have also eliminated the sales guidance. So operation EBIT is expected to be in the range of $260,000,000 to €350,000,000 for the 2019. What is important to remember is that 2018 was maintenance free.
We had no annual maintenance shutdowns. In this quarter, we will have two, Ostroleka period end five as well as Veracel. The impact of that is estimated to be about €20,000,000 compared to 2018 in the first quarter. So before heading into Q and As, I would like to conclude and summarize the 2018 and also the full year. So we have had eight consecutive quarters of sales growth, six consecutive quarters of double digit EBIT margin.
We grew EBIT by 32 in 2018 and we had an annual operating return on capital employed of 15.5 We have strengthened the balance sheet and the proposed dividend is an increase by 22%, sends a strong signal about how the Board feels about the future of Swanson. And we are also directly now combating with a profit protection program costs and potential market weakness. With that, I would like to invite Ulrike and Seppo back for the Q and A session.
Thank you, Kalle, and thank you, Sefpu. Again, for those of you who join us via the web, please post your questions online. Before I open up for the audience, I have two questions for you. So Sefpu, what happens now when CapEx will go down with €50,000,000
Well, what we need to do first is to revisit our original capital expenditure plan that we made for this year and set our priorities, make sure that where we invest, we get the best possible return on the money we spend. This is also a typical way to ensure continuous positive development of our cash flow.
And Karl, how will the profit protection program impact the Olo investment?
So first of all, we are ready with the environmental impact assessment that was done in December. We are still not ready with the feasibility study. So obviously, we are looking into the impacts of that. And once if we take a decision, it will be in this environment that we're doing right now.
Do we have any questions from the audience here in Helsinki? Okay. Then we will take one from the webcast or actually three. They are coming from Parmovirki, and he is asking, the Q4 EBIT was burdened by €40,000,000 cost from six mills. Is it safe to call them temporary?
How much of such temporary but typical process industry costs do you expect to see in 2019? And how much will wood costs increase in Q1 from a year ago? So if we start with, is it safe to call them temporary?
Yes, think so. And everybody who works in the process industry are well aware of things happening. And having six of these incidents in one quarter is quite a lot. One is was the water shortage in the lake supporting Neimolle. That's one of the biggest.
That's very unusual. And it's coming back to the dry summer in Sweden. The other one that was fairly big was the problem in Montes De Plata. It's a fairly new mill. I think it was inaugurated in September 2014 and there was some equipment that we needed to change out and it took a longer time.
And the third one, which was quite big, was Skuldware. Skuldware, we just converted into 100% fluff. And when they started up the first maintenance stop after the conversion, they had problems coming up. So usually, you have some of them, but not six in a very short period. So that I would call it temporary.
And we are all sorted it out. So they are up and running full now. The second question about the wood cost, I actually mentioned that in the call. We are estimating that the wood cost for the totality of Storansl will be around million higher in the 2019 versus the same quarter in 2018.
You have actually responded to a question from Mikko Ervastin, SEB, but I will just read it out to recognize this question. How is it possible to experience significant operational issues at six mills at the same time? What drives this? Underinvestment, lower than design capacity production due to market conditions or what? And this was what you were talking about.
Oskar Suderman is asking, when are you going to decide on the proposed dividend?
That would be in the AGM, which is in March. And it's not we who decides. So the board proposed to the AGM, and the AGM decides. So this is the proposal from the board to the AGM, to the shareholders in basic. And the shareholders will decide.
No questions in Helsinki. No further questions from the webcast. So then we conclude this session, and we thank you for your attention. Thank you.
Thank you. Thank