"Year 2017 had a promising start and our transformation into a renewable materials growth company is progressing well. I am pleased that our sales have increased for the first time since 2012. Excluding the paper business, sales increased 9.7%, primarily due to the ramp-ups of Beihai consumer board, Murów and Varkaus (board and LVL) mills.
Operational EBIT decreased by EUR 33 million mainly due to lower hardwood pulp and paper prices, ramp-up of Beihai, Varkaus and Murów mills, and other transformational costs, such as innovation and growth investments. Looking beyond these temporary costs, the underlying business shows good progress and strong promise for the future. Our balance sheet continues to strengthen. Yes, we are on the right track towards our transformation to a renewable materials growth company.
The ramp-up of Beihai Mill is proceeding ahead of plan. An important step for us, the first commercial volumes of liquid packaging board and CUK (coated unbleached kraftboard) were delivered to our customers during the quarter. Additional transformation steps include the ramp-ups of kraftliner and the production line for wooden building components (LVL) at Varkaus Mill.
We continue to invest to meet growing customer demand globally. We are investing EUR 28 million in our Heinola Fluting Mill in Finland. The investment contributes to improved quality and production capacity of our AvantFlute SC by Stora Enso; a Semi-Chemical fluting which endure demanding conditions. The timing of this investment is ideal, as we expect increased demand for high quality fluting products used for food, fruit and vegetable packaging.
We have started co-determination negotiations with our employees at Kvarnsveden Mill in Sweden regarding the plan to reorganise the mill. As we have announced earlier, this includes a permanent closure of paper machine 8 by the end of the second quarter of 2017. The entire plan would result in annual cost savings of EUR 12 million, and contribute to the mill’s competitiveness.
During the quarter, we had a very positive experience as the main sponsor of the Centenary Nordic World Ski Championships in Lahti, Finland. It was a great opportunity for us to show, how everything that is made with fossil-based materials today can be made from a tree tomorrow. Renewable wood-based materials are one essential way to help reduce the carbon footprint of any event. We had 8 000 customers, suppliers, investors and employees on site, which contributed to a very memorable event celebrating Finland’s 100th anniversary year of independence.
As always, I would like to thank our customers for their business, our employees for their dedication, and our investors for their trust.”