Perfect. Welcome to this presentation of 2017 quarter one results, BillerudKorsnäs. I'm Per Lindberg, CEO of the company. I'm accompanied by Susanne Lithander and Adrian, our temporary IR manager. Let's jump directly to the results of quarter one. I'm happy with our turnover in sales. We have a growth of 5% vis-à-vis last year, and I think this is a sign of good demand. We do have strong demand basically across the board. I'm not so happy with the result, EBITDA of 16%, SEK 923 million. As you know, we've pre-announced our results previously. We've had problems with quality, and we've also had startup problems with the small mill, Rockhammar. This has been unfortunately a recurrent theme when it comes to startup issues. I think this is something that we are dealing with. We know what to do, and we are definitely on the right track.
We've taken measures to contain quality issues with strength in our quality processes, and we know exactly what the problem has been in Rockhammar, and Rockhammar is now up and running. We view these extra costs as temporary, nevertheless, they hit us during quarter one. You have a distribution of sales also, of course, on this slide, and the bigger business areas are Packaging Paper, and Consumer Board 38%, and 17% Corrugated Solutions. If you wonder what other is, it's a combination of Scandinavian Fiber Logistics, wood sales, and some other smaller subsidiaries of ours. Key highlights. Well, first of all, we're growing again. That's really a piece of good news. I think this is what we've been waiting for. We have been constrained in terms of capacity. In 2016, we did not achieve the growth that we were looking for.
We're back on track again in quarter one, and the production is also back on track. We actually have all-time high production levels and also all-time high sales levels. Again, that's good news. Again, back to the not so good news, the one-off cost that I just mentioned of SEK 80 million. I think this could be viewed as temporary costs, of course, when we start up a mill, we start it up once after rebuild. We don't start it up twice after rebuild, just once. Now Rockhammar, as I mentioned, is back on track. The costs associated that actually happened and that we had to take in association with what happened in Rockhammar was that the mill completely stopped because of breakdown of some key components. The cost was that we had to supply Frövi with external pulp, because Rockhammar supplies Frövi with CTMP pulp.
That's the background for that cost. Also when it comes to the quality, we have contained material, which has not been sold, and we've taken all the cost, and we've blocked all the material, and that's where the cost arise, for the blockage of all this material. I should mention also that our investments in Gruvön and Skärblacka as well underway, it's well on track and I see no major issues around these projects right now. Of course, given the issues that we've had with production problems over the last few quarters, one may question, can we produce at all? Well, yes, we can. We have an annual compounded growth of 3% over the last three years, as you can see by this slide. We're right now at all-time high levels, and see no reason that this cannot continue.
Production is actually doing well in spite of the temporary issues that we've had from one time to the other. The lessons learned, I would say, is that we need to be more cautious when it comes to pre-projects and in terms of preparations for startups. I think over the last couple of years in the rebuilds that we've done, we may not have taken necessary measures after the fact, that's obvious. Going forward, we will be more stringent when it comes to planning for and taking measures for our startups. Financially, sales volumes up to 722,000 tons, that's record volumes. I think this is especially good news, and again, it indicates a strong market. It also indicates that when we are capacity constrained, we cannot sell. Now, production is running well, and we can sell.
Especially good news is the fact that Consumer Board increases with 8%, and I think that's also what we have been looking for. As you know, the production issues, the investments that we have made primarily is towards Consumer Board and capacity. Now that's up and running, and we can start selling as expected. Sales volume is really satisfactory. Net sales, also satisfactory, 5% up. Actually, the organic growth is 3% because in these numbers, in the quarter one numbers is Scandinavian Fiber Logistics, which was not part of quarter one of 2016. Organically up 3%, but still that's within our target 3%-4% per annum. I think we are reaching what we intend to reach when it comes to sales growth.
If you look at the slide, you see that Q1 of 2015 was actually higher than Q1 of 2017, but the reason was Latkyrko that we sold during Q2 of 2015. EBITDA is actually down 9%. As you already know, we have announced the reasons why. If we compare to Q1 of last year is down with 9%, last year, we did not have a maintenance stop, and we did have part of a maintenance stop during Q1 and part of it during Q2 in Gruvön. The cost is SEK 75 million. We did have the, as we view it, temporary costs for quality and startup of Rockhammar. If we theoretically back that out, our EBITDA margin is actually at 19%, not the 16%, and that's where I feel we should be. I'm not happy with the one-off cost.
I'm not happy with the hiccups that we have, but underlying, I think we are where we should be when it comes to EBITDA. Cash flow during the quarter is negative, and the reason is pretty straightforward. It's due to our investments. Working capital is at 11%, where it was also during the last quarter. No significant change. Return on capital employed is adjusted, which an adjustment means that we back out the provisions that we made during 2016. The provisions made during these 12 months was SEK 230 million, SEK 205 in Q4 and SEK 25 during Q2. You're whispering. It was actually over SEK 300. Over SEK 300. On EBIT, not EBITDA. EBIT. Sorry. Over SEK 300. Thank you. Sorry. We are adjusted at our target, which is also good news and of course, where we should be.
Leverage is safely below 2.5, not too much to say. The reason it goes up, of course, is the negative cash flow in our investments. Summary, I think, again, I'm not so happy with the result due to the hiccups. We're taking measures. We're fully aware that hiccups are not long-term acceptable. Underlying, I think we are where we should be when it comes to our financial performance. Looking at business areas. This is just an introductory slide for those of you that are not so familiar with our business areas. First of all, Packaging Paper. We have strong positions in Packaging Paper. We have a strategy which basically says we're going to be selective. The reason is that parts of this business is doing really well. Part of it is less good on the market, more commodity type markets.
Of course, we intend to shift from commodity more into specialities. Structurally, it also means that the investments that we make in Skärblacka and Gruvön has the intention of strengthening our position in specialities and, of course, taking some capacity out in some of the more commodity-like markets. We're also keen on expanding Packaging Paper outside of Europe. We're right now above 40% of sales outside of Europe. That is progressing well. We see actually very strong demand for our type of products in Southeast Asia and China. I think that is something that is really exciting. It's on the back of an increased awareness about sustainable packaging, not the least replacement of plastic packaging towards more sustainable paper packaging. I think we've seen strong performance.
We'd actually closed Tervasaari during the fall in September. That's not visible a lot in our numbers. We did build the inventory during the latter part of 2016, so sales for Packaging Paper has partly been done from inventory from Tervasaari. It's up 3% vis-à-vis last year. It's up 4% vis-à-vis Q4, so sales-wise, doing fine. EBITDA up 9% versus Q1 of last year, is right now at 18%, slightly actually below where we normally are. The reason is basically that SEK 28 million out of the SEK 75 million from the maintenance stop in Gruvön hits Packaging Paper. If we adjust for that, we are at EBITDA 20%, and that's where we should be for the business area. The market for kraft and sack paper is currently very strong. It's actually surprisingly strong.
The reason is not easy to actually disseminate and pinpoint, but definitely a very strong market at the moment. Should say also that seasonally, this part of the year is typically strong. Especially when it comes to sack papers and construction industry, typically it picks up in the beginning of spring. It's strong throughout April, May, June. Then falls off a little bit. Seasonally, we have a typically strong period right now in Packaging Paper. It seems like there's additional demand on the market, so underlying the market is also very strong. We expect that to continue throughout quarter two. There are potentials to raise prices on the back of this strong demand. I say potential. I'm not saying that it's going to happen, but there are potentials to raise prices. Packaging Paper, I think, demonstrates solid performance during quarter one.
Consumer Board done well. This is a slightly different business area and a very different market. It's a lot more stable typically, and a lot higher visibility, not at all as fragmented. Where we have in Packaging Paper about 800 customers, the customer base is far more concentrated in Consumer Board with higher visibility, higher stability, and also typically higher growth. This is why our strategy is directed toward volume growth. Of course, that's the reason why we also invest in a board machine in Gruvön. Performance-wise, I think we're doing reasonably well, even though, of course, we're hit by the temporary costs. Typically, quarter one is seasonally strong.
Not necessarily that people drink more milk or juice or anything like this, but there tends to be somewhat of a year-end effect where demand slightly lower at the end of the year and slightly stronger at the beginning of the year. We also see this in quarter one of this year, slightly stronger than average demand. We also see strong demand basically from all markets, so it's certainly not only seasonal. There is a strong underlying demand for Consumer Board products. I also think that, especially when it comes to cartonboard, which was slightly sluggish during parts of 2016, we see a pickup of demand as well, which is also good news. Net sales is up 5%, as mentioned. That's something that we have been looking for. We have been capacity constrained, and it's also up 7% vis-à-vis quarter four.
I think from a sales perspective, satisfactory. EBITDA is down, and that's due to the SEK 80 million. If we theoretically back that out, which is SEK 80 million, we have an EBITDA of SEK 520, and we're up to 24% EBITDA margin, and that's exactly where we should be. Underlying performance is actually where I think we should be for this business area. Corrugated Solutions, finally. This is the business area which we operate on a huge market. The world market is 140 million tons. We are a very small player in this big pond, and with our half a million ton capacity. We're a niche player by definition, and our products are niche products, and that's how we operate.
Our target is to maximize the value, to extract maximum value out of our high-performance materials, because our materials are high performance when we compare to most commodity products on the market. That's, of course, why we address value growth as a theme for our strategy. On the back of that, we continue to expand Managed Packaging, which is part of Corrugated Solutions. The Managed Packaging continues to demonstrate the strong sales growth of 30% versus last year. Managed Packaging is now 16%-17% of the business area, a run rate of SEK 60 million, and a growth of 30% first quarter. I don't think we're going to maintain that growth for the rest of 2017, but certainly above 20%. That's my expectation. We've had some issues around the harbor strike in Gothenburg, and we've seen some effect, especially for Corrugated Solutions.
We've actually managed to redirect about 100,000 tons from Gothenburg to other ports, especially Norrköping. We also see some delays in terms of deliveries for volumes for Corrugated Solutions. At the end of the quarter, we had volumes sitting in Gothenburg waiting for deliveries. Not huge, but still, it has had some effect in terms of the sales volumes for the business area. EBITDA is down 12% versus last year, and it's very straightforward. It's the maintenance stop in Gruvön. Most of the cost for the maintenance stop is for Corrugated Solutions. It's about SEK 40 million. Again, if we do the theoretical exercise of backing that out, underlying EBITDA is at SEK 230 million, and the margin is at 25%, and that's typically where we should be for the business area. We saw during 2016, some periods of sluggish demand for our products within Corrugated Solutions.
We're now back on track when it comes to demand with strong order books, and we expect that to continue into quarter two. Again, in this business area, the demand is such that we see potentials for price increases. I wouldn't necessarily bank on it, but there are potentials for price increases for the business area. As I mentioned already, we expect Managed Packaging to continue to grow with significant numbers also into quarter four and quarter two. Outlook. This is, of course, a derivative of what I've already said. Demand is strong at the moment, and we expect that to continue. Some potentials for price increases for Packaging Paper and Corrugated Solutions. Wood costs and wood prices, we don't expect to change. We did basically mention or announce that we expect the 3% increase of wood cost for 2017.
We've seen part of that materialize in quarter one. We don't think that there is a reason to change the guidance. Again, it's not the prices, it's the wood cost, and the reason is transportation, somewhat longer distances, and that's the reason for the increase of overall wood cost. As mentioned, we expect Rockhammar to be on track volume-wise, production-wise, but we will have some additional costs for the temporary measures that we've taken to secure production. More specifically, what happened in Rockhammar was that we installed two brand new steam compressors, and when we took them into operation, they both broke down due to a design error from the supplier. This is now being redesigned. We'll get the components back in June. Meanwhile, we operate a temporary steam compressor, which will add some additional cost in Rockhammar.
Only SEK 5 million to SEK 10 million, but we know that's going to happen, so we mention it. Also we do have maintenance. The maintenance stop in Gruvön is now over, and we do have a maintenance stop in Skärblacka undergoing. Overall cost, we expect to be SEK 205 million for quarter two. A few words about the investments in Skärblacka and Gruvön. As mentioned, it's on track, and the investment in Skärblacka is basically we are moving the Tervasaari machine from Tervasaari to Skärblacka. It's now going to become PM10 in Skärblacka. It's going to be integrated and have a completely different cost base, of course, being integrated. We also upgrade quality with surface treatment for PM7 in Skärblacka, again, to be more selective in terms of the segments that we target for business area Packaging Paper. On track.
New board machine in Gruvön, that has a major impact on the entire production structure in Sweden. It is actually two reasons. One is basically to capture growth on the market, the other one is to streamline operations internally, that is also on track. We will describe more about these investments, about our strategy at our Capital Markets Day in November 15th. If you can, please make a note, you are more than welcome to attend this Capital Markets Day. That is it for the presentation. I open it up for questions.
Thanks. It is Linus Larsson, SEB. You talked a bit about the strength that you are seeing in various markets, you touched upon potential price hikes. Could you talk a bit more about that? What kind of initiatives you have launched? What kind of magnitude and timing that we could potentially foresee in the various product areas?
Well, as I said, there are potentials for price increases