To the presentation for the first quarter twenty eighteen. A special welcome also to those of you who are joining us via the webcast. My name is Ulrike Elijia. I'm Head of Communications, and I'm standing here with our CEO, Karl Henrik Sundstrom and our CFO, Seppo Parvi. After the presentation, we will open up for a Q and A session.
And those of you who are joining us via the web can post your questions online. With that, I hand over to you, Kelly.
Thank you. So even though we preannounced pretty much the essentials of the results, the April 13, it's actually still a fairly good story to tell. It is a very good start of the year. It's a very promising start of a new year. So sales grow 3.3%, excluding divested Pumarc is up actually up 4.5%.
And this is the fifth consecutive quarter with growth. Operational EBIT came in 72% higher than the same period a year ago. And it's actually the highest since 2001 when you look on the profit margin of 14.3%. We have had a strong operational performance. We have profit improvement program that is yielding more than we initially thought.
The CHF 50,000,000 is actually up to $70,000,000 now. And that's important to hold in your cost even when you're growing. Cash flow came in strong and the balance sheet had continued to strengthen. The net debt to EBITDA has actually improved from 1.9x a year ago to 1.3x. And the icing of the cake of today is actually that we third consecutive quarter over 13% on return on capital employed and in this quarter, 17.7 percentage points, which is the highest since year February.
It's been a long journey, but it's going in the right direction. If I go shortly into the results before Seppo goes into the details, I think this picture explains pretty much what happened in the first quarter. Consumer Board improved million euros or almost 50%, of which about one third is coming from the European mills and two thirds is coming from the ramp up of Beihai, which continues to ramp up over the full year over year. And you remember, we just passed EBITDA breakeven in the 2017. Packaging Solutions increased 154% or $37,000,000 versus the same period a year ago.
That is driven a lot by the kraftliner in our Warkhouse investment plus China, but overall, a very strong performance across the whole division. Biomaterials increased $9,000,000 or 93%. And this is basically driven by favorable pulp prices. But we also had some tailwinds, and that is basically that we were running the mills slightly lower than a year ago, and we had some challenges when it comes to shipping in the quarter end, moving from one quarter to another. That all in all consists about 50,000 tonnes.
Wood Products, 7,000,000 increase or 32%. This is the highest first quarter result in the history of wood product. And then in paper, 64% increase or 27%, driven by increased prices and high utilization during the quarter. It's important to remember, this is the highest EBIT margin in ten years, and this is a good result. The areas on transformation continues.
So in this 2018, we've actually sold off the Baijonfort sheeting operations in Germany. We have made final closure of the Hainola corrugated plant. Obviously, we continue with the mill. And we have actually signed an agreement to divest the forest holding we're having in Rio Grande do Sul. And the deal is expected to be closed during Q2.
We've also been working on a number of new investments. The Lacti corrugated packaging unit, which is improved and better than before, is ready. We have concluded the environmental investment in Skuttgart and we have actually started the production in the Hilti Biocomposite Granules, which is a new area for the old paper mill to move into the Biocomposite area. As we say, the transformation journey continues. So now 70% of sales in a good strong sales quarter represents of the growth divisions.
We had growth across all divisions in this quarter and 81% of the profitability, which means that we are on the right path. And this is promising for the future. With that, I would like to hand over to Seppo to give you further details on the various divisions and other areas. So
thank you, Karl. And I start by going through some key figures for the quarter. First of all, sales. Top line increased 3.3%, so another quarter of top line growth. And it's not only that top line growth would be growing, but we also improving profitability, which means that there is profitable growth that continues.
And operational EBIT reached EUR $369,000,000, that is an increase of 71.6% compared to year ago and operational EBIT margin at record level of 14.3%. Earnings per share at €0.35 a share, a significant increase compared to €0.14 a share a year ago And operational return on capital employed at 17.7%, clearly above the targeted 13% level. Also balance sheet continues to strengthen and during the quarter, we reduced net debt by almost €500,000,000 compared to a year ago. And our net debt to last twelve months operational EBITA came down to 1.3. Then moving to divisions and I start with Consumer Board, where record operational EBIT was driven by strong growth and improved operational efficiency.
Sales was up 6% and was at all time high six forty six million euros That is driven by better volumes in European mills and successfully continued ramp up of the Beihai mill. Operational EBIT was up 49% to record high Q1 of €91,000,000 And operational return on capital slightly below the targeted 20% level at 18.5. Also, Pioneer Food Seating Centre divestment was completed in January, as announced earlier. Then moving to Packaging Solutions, where we had another record quarter. And this was now fourth consecutive quarter with both record sales and profitability.
Sales increased 15% to record high Q1 of three thirty three million euros thanks to favorable pricing environment as well as continued growth in our China Packaging unit. Operational EBIT was at all time high level of €61,000,000 that was increase of 154% compared to a year ago. And operational return on capital, a record high 27.7% compared to 11% level a year ago. We also finalized our consolidation of corrugated packaging manufacturing in Finland during the beginning of this year, and now we have center of excellence created in Lahti. And we closed our corrugated plant in Hainanola permanently, but we continue in Hainanola our fluting manufacturing operation as early.
Then moving forward to Biomaterials division, where we also had all time high despite the headwinds relating to wood sourcing situation in The Nordics, especially in Finland and Sweden, but also negative effect of the foreign exchange rates. Sales was up 7% and operational EBIT 93%, reaching all time high €102,000,000 Operational return on capital also above the targeted 15% level at 17.6%. And also during the quarter, finalized, completed the Skutsar 16,000,000 environmental performance investment. Also, we are very proud that we received an award during the quarter for the Linea by Sturenso, our Linea product that is a renewable replacement for oil based phenolic materials. Then moving to Wood Products, where we had record high first quarter also.
Sales increased 4%, excluding divested PuMerke and the bulkhead wood super operations that we transferred last year to segment Other. Operational EBIT up 32% to record high Q1 of €29,000,000 and highest since 02/2007. Ramp up of the LVL production at Warkas will continue and we have reached the EBITDA breakeven and ramp up is expected to be completed by mid-twenty eighteen. Also our CRT investment project in Sweden, Kruger, is proceeding as planned and there we expect to begin production in first quarter next year. Also in Sweden at the Hiltemill, where we have started production of biocompat granulates, the project is moving ahead and we are now working on commercialization with several customers.
Then Paper, also their highest first quarter EBIT margin in ten years, sales up 3% to €772,000,000 and operational EBIT up 64. Also, flow after investing activities was at 6.2% level, which is only slightly below the target 7% ratio compared to net sales. Then to finalize by looking at the strategic targets where we stand with those, as you see a lot of green and yellow spots. The one on red is still our fixed cost to sales ratio, where the targeted level is 20%, but the positive thing is that there we are moving now to right direction. It came down to 22.6% level compared to 24.1 a year ago.
Our debt ratio is clearly below the maximum ratios defined, and like said earlier, operational return on capital employed at 17.7% compared to 13% targeted level. Then looking at the divisions, first of all Consumer Board, like said, still slightly below the 20% targeted level at 18.5%, but Packaging Solutions, the good performance continues and the return on capital now at 27.7%, great improvement compared to 11% level a year ago. Also, Biomaterials division now clearly above 15% targeted level at 17.6%, there is also a clear improvement compared to 7.9% a year ago. And Food Products continued solid performance and return on capital at 20.4%, also above the targeted 20% level. And Paper, like I commented earlier, cash flow after investing activities to sales ratio at 6.2%, slightly below the 7% targeted level.
With that, I hand back to you, Karl.
Thank you, Seppo. And now I will go through the guidance and some concluding remarks, and then we'll go into the Q and A session. So the guidance for the 2018 is that sales are estimated to be similar to or slightly higher than the amount of CHF 2,579,000,000.000 recorded in the 2018. Operational EBIT is expected to be in line with or somewhat lower than the €369,000,000 recorded in the 2018. The impact of the annual maintenance shutdown is expected to be approximately €40,000,000 higher than in Q1 twenty eighteen.
Nordic wood supply situation expected to continue to be tight. Impacts are expected to be at the same level or lower than in Q1 twenty eighteen, approximately €10,000,000 And here, you also have a schedule of what mills will have the annual maintenance shutdown. So yes, accelerated profitable growth continues. We have sales growth for five consecutive quarters. We are having an operating margin of 14.3%, it's the highest since 02/2001.
Favorable prices and mix optimization combined with continuous successful ramp ups of our strategic investment we have done over the past years, supported by a strong operational performance, is the reason why we have had this level of profitability. As I mentioned earlier on, it's a record high return on capital employed, highest since year 2000 and we have continued to improve our debt matrix with a net debt to EBITDA now at 1.3 from 1.9 a year ago. We've actually repaid almost CHF 500,000,000 in debt over a one year cycle. So yes, we are moving from asset transformation to innovation and sales transformation and the business model is proving to be very robust and stable. Before going into the Q and A session, I would like to remind everybody that we have a Capital Markets Day here in Helsinki, the November 7 this year.
But with that, I open up for the Q and A session. Please Ulrike and Seppo.
And as said, if you are joining us via the web, please post your questions online. So I can start with the first one for you, Kalle. Yes. Can you tell us us something about the status in the Bergvik restructuring?
So we are moving according to plan and everything is basically running in the original timeline. This is a complicated deal because it's splitting it up between basically three components. It's splitting it up between Belarus Koschnez in Baivigost and splitting up Baivig Vest between us and what we call the consortia, which are the minority owners and a third party called FAM, which is one of our owners. So it's going according to plan and I expect this to be concluded during this year.
Do we have any questions from the audience here in Helsinki? Then we have one question from Kepler Lehte Werra. So the wood supply situation was a bit worse in the last quarter than you thought in December.
When we guided actually early February, we are talking about single millions or single millions. It became a little bit worse. And the way we solved it was actually to partly run the pulp mills a little bit on lower capacity. Because in those days, it was still a bit earlier for what happened in the middle Sweden. We only were focusing on Finland, but we got Sweden as well during the first quarter.
Now Sweden is basically sold and we continue with some challenges in Finland.
I can actually build on that. We have have a question from the webcast coming from Torbjorn Esping at Landscottsburg. If you can take this one maybe, What is the extra cost of wood in Sweden and Finland? How much is due to weather? And how much is due to market prices?
And what is the expectation of wood cost, pulpwood and timber this year? So if we started with what is the extra cost of wood in Sweden and Finland? And how much is due to weather?
Well, it's, of course, difficult to separate between the two. Like Karl said, and it was mentioned in the presentation, we estimate about €10,000,000 effect coming from the wood situation in Nordic countries, Finland and Sweden. Of course, at the same time, we have to remember like when we have been slowing down production due to the challenging wood sourcing situation, also our competitors have been doing the same as that has, of course, affected the availability of pulp on the market, which has maybe also helped the pricing environment. So it's not black and white. So there are many different parameters.
And I think this €10,000,000 is pretty good picture about where we stand with the situation.
And I think it's important here also to remember that you can also compensate with your customers if timber prices are going up or pulp prices are going up. So it's a dynamic situation. You cannot only look at one part of the equation.
And then when it comes to prices going forward, of course, we don't guide wood prices separately. But like Karl mentioned, for the Q2 in the guidance, we expect the same €10,000,000 max effect coming from the wood situation.
Then the next question comes from Barry Dixon. He's asking, corrugated shipments were down 1.5 in Q1. Why was this? What do you think is your underlying growth rate of corrugated demand? And how much have corrugated prices increased by over the past twelve months in percentage terms?
So first of all, our focus is not volume, it's profitable growth. We are focusing on value creation. So we have chosen deliberately in the Coral units to go for value, not for volume.
And pricing has been favorable and also driven in general because of the increasing pulp prices pushing up port prices and that is then affecting the whole supply chain. Any
additional questions from the auditorium? As there are no more questions from the auditorium or the webcast, we thank you for your attention and conclude this webcast. Thank you.
Thank you. Thank