Welcome everyone to this announcement of our 2021 annual results. I hope this message finds you well. 2021 was an extraordinary year, with a historically unique and unprecedented cost inflation across all input factors. This has happened while we were extra busy with two strategic acquisitions and the following post-merger integration process, a divestment, the launch of several major CapEx projects, and a restructuring. All parts of a bigger structural transformation program for more competitiveness, more growth, and higher profitability with a view to 2030. On top, we launched several initiatives concerning digitalization, sustainability, innovation, product pricing, employer branding, productivity enhancement, and fixed cost reduction. In this amalgamation of several crises, COVID, raw materials, energy, war in Ukraine, the MM team handled the day-to-day businesses very, very well. Was it about finding the best solutions for our customers in an often highly disrupted supply chain?
Was it about passing on cost increases or bringing in great flexibility in the second year of COVID? In addition, there was huge support for our demanding strategic projects. For this successful high dedication, I would sincerely like to thank all our employees on behalf of the Executive and Supervisory Boards. Thanks to this outstanding team performance, a very difficult year 2021 was at the same time a very successful year 2021. It was financially successful, with operating profit and net income up around 17%. You will hear more details on financials to follow soon from our CFO. Even more important, 2021 was a breakthrough year in preparing the platform for future growth of MM. In line with the solid earnings performance in 2021, we will propose to the AGM to increase the dividend by 9% to EUR 3.5 per share.
Going forward, I want to address two topics which were imperative in 2021, but which will also be highly relevant throughout the current year. The first topic is cost inflation, and the second topic is the strategic transformation of MM. Let's start with cost inflation. Huge and rapid cost increases of basically everything, recycled paper, pulp, wood, energy, chemicals, transport, and other input factors, were a significant challenge for our business in 2021. These unprecedented inflationary dynamics seem to last, and with regards to energy, maybe even to accelerate. Just to give you an example, when I arrived at MM two years ago, the price of mixed recycled paper was at the level of around EUR 40 per ton. Then the price went up every quarter. Every quarter, experts were predicting, "Now this will be the peak.
From now on, they will go down." It didn't happen. Now the price is at EUR 220. We have seen an increase by a factor of five to six in just 24 months. Well, let's take a second example of natural gas. When I came, it was at around EUR 15, EUR 15 . Now we see prices of EUR 150 and beyond. An increase by a factor of 10 just within a short time span. I could continue to talk about drastic cost increases of many other goods and services like transport, which we are purchasing. Throughout 2021, we were limited to pass on this cost inflation due to contractual obligations which stipulated quarterly, half-yearly, or full-year price validities, and sometimes slow-moving indices.
Although we implemented three board price increases in 2021, whenever this was contractually possible, this was not yet enough, and margins in the Board & Paper segment recovered just very slowly from the trough in Q2. To counter the lagging effects, we reduced validities, introduced surcharges on energy, and redefined cost indices. However, unlike many other peers, we did not break contracts, and many of our loyal, long-term customers highly appreciate this. At the start of this year, we already implemented additional significant board price increases and are going to see further increases by the beginning of April. In Packaging, we will see a temporary reduction of margins due to a number of multi-year contracts with price adjustment clauses, but not covering all our input costs or and with long delays.
Overall, the target medium term, we target medium term an operating margin of 10%-12% in order to be in a position to invest and innovate. Our customers request higher product quality, more innovation, more sustainability, higher capacities, and enhanced productivity. We can only deliver if our returns are above our cost of capital. Apart from our ongoing cost and margin management, 2021 clearly demonstrated the strategic transformation of MM towards a strategy of growth, emphasizing increased competitiveness and higher profitability. We have scaled up production and broadened our product portfolio with attractive opportunities for future development. Last year's acquisitions of the large cartonboard and paper mills, Kwidzyn in Poland and Kotkamills in Finland, combined with the divestiture of two smaller mills in Germany and the Netherlands, constituted a milestone along our new strategy for more growth, lower cost assets, and higher competitiveness.
I'm really pleased to report that seven months after closing of the acquisitions, we see synergies well above the original number of around EUR 25 million per annum, which we've targeted for 2024. For 2022, we already expect run rate synergies of between EUR 15 million and EUR 20 million, however, partly compensated by one-off costs and CapEx. We are currently executing larger CapEx programs at the MM legacy mills in Leonding, Austria, Neuss, Germany, and Količevo, Slovenia. Our results shall be positively impacted from 2024 onward. At Kotkamills and Kwidzyn, we are really focused on smaller CapEx in 2022 in order to keep the focus on achieving or even overachieving on our synergy targets. Also, in Packaging, we have started the transformation with targeted CapEx into scale and specialization and more value-added business.
Along this way, we are substantially growing our three plants in Bydgoszcz in Poland and are starting to build a new packaging plant close to Warsaw. In addition, we have expanded selected sites in order to come to critical size, for instance, in U.K., Austria, and Romania. In parallel, we conducted targeted structural adjustment measures in Germany. In 2021, we've intensified our sustainability efforts. Our CDP climate rating improved from C- to A-. For the first time, MM has achieved leadership status and has moved into the preferred supplier category. In addition, we significantly stepped up our innovation efforts for sustainable fiber-based packaging, especially directed to the topic of plastic waste avoidance. Now summing up, MM has been successful in 2021 and progressed well on its strategic transformation towards more growth and higher competitiveness.
At the same time, MM has retained a robust balance sheet with conservative financing. I hand over to our CFO, Franz Hiesinger, before I come back with an outlook on the current year.
Welcome to everybody, also from my side. The MM Group closed the 2021 financial year with a substantial increase in sales and earnings. Since our two acquisitions, Kwidzyn and Kotkamills, are included from August onwards, while the divestment of the Eerbeek and Baiersbronn mills was deconsolidated in parallel, comparison with the previous year are only limited meaningful. With EUR 3.1 billion, group sales were up 21% or about EUR 540 million, mainly due to the acquisitions. Geographically, sales to Eastern Europe went up four percentage points to 32%, while overseas sales declined to 14% and Western Europe was stable at 54%. This reflects the strength of European markets in 2021. While we enjoyed good volumes, we were facing a severe margin squeeze due to high cost inflation, which could only be passed on stepwise through higher prices.
While operating profit absolute was up 17%, the operating margin was down to slightly below 9%. One-off income from the divestment of the Eerbeek and Baiersbronn mills in the amount of EUR 46 million was offset by non-recurring expenses in approximately the same amount. These consist of EUR 26 million of one-off expenses from the first consolidation of Kwidzyn and Kotkamills, mainly transaction taxes, inventory valuation, and acquisition costs, and EUR 20 million restructuring cost for a German packaging plant. From a group perspective, both of our divisions contributed in almost equal parts to the enhanced operating profit with 24% increase at MM Board & Paper and 12% increase at MM Packaging. ROCE at 13% came in somewhat below the previous year's level.
The EBITDA of more than EUR 420 million, equaling close to 14% of sales, demonstrates the ongoing high cash generation of the MM Group. In order to finance the Kwidzyn and Kotkamills acquisitions, as well as our comprehensive CapEx program for enhancing competitiveness and future growth, we have issued a EUR 1.125 billion Schuldschein loan with an average duration of 9.8 years and an average interest rate of 1.58%, which we consider as a favorable and solid long-term financing. In 2021, we spent more than EUR 1 billion on acquisitions and invested almost EUR 260 million in line with our guidance. In addition, EUR 64 million were distributed on dividends. This is a significant outflow of funds, bringing net debt to EUR 1.06 billion.
However, with 2.1x net debt EBITDA ratio, we remain clearly below our target of 2.5x. With an equity ratio above 40% and the confidence that was placed by long-term investors in our resilient business model and the growth strategy, the MM Group's financing continues to be based on a robust fundament. Continuous dividend payment is highly important for us and our shareholders. Therefore, we are delighted that we will propose to increase the dividend by 9% to EUR 3.50 per share and can prolong a more than 25 years upward trend in dividend payment also for 2021, along with the first improvement in net profit. Thank you.
Let me start the outlook with a few words on Ukraine. We are shocked and deeply concerned by this war and the suffering and loss of lives. We are supporting our team in Ukraine and their families and donate to charities for humanitarian aid in the country. We have stopped cartonboard deliveries to Russia. To give you an idea about the importance of Russia and Ukraine, we've generated in 2021 approximately 9% of group EBITDA in the combined region, Russia, Belarus, and Ukraine. We hope for an immediate ceasefire agreement and a diplomatic resolution of this appalling conflict. Overall, for 2022, we expect further cost inflation, the extent being closely linked to the duration and intensity of the war in Ukraine and the sanctions.
On top of high energy costs, there is the possibility, a remote possibility, but it exists, of supply disruptions due to a lack of gas supply. As already said, in Board & Paper, we have implemented necessary price increases at the start of the year in response to massive cost increases. In addition, a further cartonboard and paper price increase is on the way for the first of April in order to compensate for the ongoing cost inflation in Q1. Also in Packaging, we are continuously increasing prices. As I've previously mentioned, due to some long-term contracts with price indices not covering all costs and delays of passing on higher costs, we expect a lower operating margin in Packaging at least for the first half of 2022.
In both divisions, we are working on a number of projects to increase efficiencies, reduce fixed costs, and achieve structural cost reductions in order to at least partially compensate the cost inflation. Pleasingly, we enjoy a very strong order book and high demand for both Board & Paper, as well as Packaging. This is very important for us and a great support. Sales volume will strongly increase in Board & Paper due to the effect of the acquisitions of Kwidzyn and Kotkamills, which will be included for 12 months compared to close to five months last year. However, on a like-for-like basis, the rebuilds in 2022 and 2023 and the associated downtime of mills will keep like-for-like capacity broadly flat. In Packaging, the recent expansions at several plants should allow for somewhat higher volumes in Packaging in the second half of this year.
As already indicated, CapEx are expected to be in the range of EUR 250 million-EUR 300 million for both 2022 and 2023 due to the intensified investment activities in both divisions. The orientation of MM towards a sustainable long-term growth strategy has proven successful and will be further pursued. While the focus at Board & Paper is currently on the integration of our recent acquisitions, Packaging is seeking expansion also through acquisitions alongside the already mentioned organic growth projects. Despite current challenges and uncertainties, I am strongly convinced that MM has successfully set the strategic course for improved competitiveness, growth, and profitability with a view to 2030. Our products are from renewable resources and recyclable. The trend towards sustainability gives us a bright future and a clear mission.
As our products for food and pharma are needed on a daily basis, demand is expected to be robust throughout the economic cycle. Our solid financial basis, efficient processes, and a highly dedicated team give MM resilience and strength in difficult times. Thank you.