Wienerberger AG (WIE) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Haley, your Chorus Call operator. Welcome, and thank you for joining the conference call on the closing of Meridian. [Operator Instructions] And I would now like to turn the conference over to Elisabeth Falkner, Head of Investor Relations. Please go ahead.

Ladies and gentlemen, a warm welcome also from Wienerberger on today's call on the closing of the Meridian acquisition. Our Board representatives today are our CEO, Mr. Heimo Scheuch; and our CFO, Mr. Gerhard Hanke. They will lead you through the presentation provided on our website and give some further insight on the acquisition. After the presentation, we are ready to take your questions. I will now hand over to Mr. Heimo Scheuch.

Thank you, Elisabeth, and a warm welcome from all of us here out of Vienna. Delighted that you have the time to join us to this update call with respect to the acquisition. The acquisition of Meridian Brick represents a major step for Wienerberger, a major step for a couple of reasons because we have worked on this acquisition for quite some time. It is a strategic compelling acquisition and financially very attractive one for Wienerberger. It enhances our presence in Canada and the U.S. significantly. It represents, obviously, an acquisition where we consolidate the North American industry substantially. But that's not the only very important reason, the reason is also that we can offer our customers throughout North America a very compelling product range consisting of renovation products, new build products and infrastructure products. And I will elaborate on this a little later. Obviously, such acquisition contributes very positively to our EBITDA development in the future, and Gerhard will sort of elaborate on this in a minute. And finally, it shows that the acquisition that we have now successfully closed, and it's the biggest single acquisition in the last 15 years for Wienerberger. And again, we as management have been very sort of reluctant to implement our targets as far as payback is concerned. And you will see how low the multiple is compared to other transactions that other companies carry out in this field of activity and how disciplined we, as management of Wienerberger, have been performing our M&A strategy in the last years. It's obviously a good example also from a strategic point of view how we want to grow the company and how we obviously aggressively develop Wienerberger to a leading player also in the North American market. Some of you might ask the question, yes, Heimo, why did it take so long? And again, I must say also myself, and this is -- obviously comes very transparently to you, I was surprised how long such a procedure takes in the U.S. But I had to learn as well that changes in administration, you perfectly are aware that we had a substantial change in administration in Washington. And obviously, this had an effect also on the Department of Justice and their way of dealing with such an issue. It was not that it was complicated per se, but it took longer. It took longer for a couple of reasons. Home office, for example, getting the information across, digesting it, the whole sort of question-and-answer process took longer. But at the end, obviously, I understand if you see the multitude of projects that are currently in front of the antitrust authorities in the U.S., we have handled it rather well and got the approval in an acceptable time frame. We have also, and this is important to know, got a remedy package that is still very positive for Wienerberger in the sense that we have only to "sell" 3 production sites. These 3 production sites are located in the states where we obviously have a significant overlap. That's why we have to dispose of those, and I will elaborate in a second where they are and what effect it has, and obviously, certain distribution centers and outlets. These are small sort of distribution yards, I would call them, where we distribute locally. And obviously, they are linked to these production sites. So all in all, everything lies within our expectations. It took a little longer. We have found, and that's obviously also very important, a suitable buyer for those assets. I have to remind you that, obviously, the Department of Justice is here very thoroughly following this procedure and have worked very closely with us in order to find a suitable buyer. It has to be 1 buyer for those assets that qualify certain criterias. That means that they can run the business for a long period of time, that they successfully sort of are active in the market and develop it further. And we are glad that we could provide with U.S. Brick, the South Carolina-based company out of Columbia, South Carolina, a local manufacturer, a traditional one, a family business that will develop these 3 sites further and be active in the marketplace. When we look at these sites, they are located, obviously, in what we would call the northern part in Indiana. We sell off one production site of Wienerberger called Mooresville. Then we sell one site in Tennessee, Gleason, that is the next Meridian site and also a site in Alabama coming from the Meridian site, Bessemer that is active in this region of Alabama. And as I said, these production sites have also distribution outlets linked to them and the 13 will go. So this is all within our expectations. And we have already negotiated also a package from the perspective of SPA with U.S. Brick where they will buy these assets for USD 23 million. And I think, all in all, therefore, we have successfully completed the transaction as such, have faced this lengthy procedure. I'm happy that we could provide the American authorities with these sort of remedies and can now concentrate fully on the integration. Before we go in more detail, I will hand over to Gerhard, who will give you a little overview of our performance in North America. Gerhard?

Thank you, Heimo. Yes, looking back to the last 10 years, the North American business developed very strongly, and we show a very strong and good earnings performance. We were able to achieve an average 24% EBITDA growth per year when we look back to the last years, whereby housing starts basically only developed by round about 10% on a yearly base. We optimized the last 10 years our industrial footprint, our commercial structures. And this is also, I think, now a strong platform. What we have for the new combined business, which Heimo will explain you how the new combined business will look like.

Thank you, Gerhard. And we are thrilled and excited for a couple of reasons. First of all, let me start with a country in North America that we don't speak so often about, Canada. This transaction brings us in the #1 position of masonary products in the most important market in North America in the region of Ontario in Toronto. Here, we obviously have done 2 manufacturing sites for facing bricks, and we have already a very big site for artificial stone, Arriscraft. So we will operate under our trade and brand, Arriscraft, and we will sort of establish the old or which we would call the traditional brand, Canada Brick. So we will be active in this region with a #1 position of mansonry products in this area with a lot of new products and solutions for the facade, for renovation, for new build and also for public buildings. So again, it's, I think, important to note that in this very important area that is growing fast, it is still sort of the major growing agglomeration of North America. And also, by the way, in the French-speaking part, we have a clear #1 position in the Montreal area where we will grow our business significantly. So all in all, I think this is, first of all, a very good transaction where we can combine our forces. We have strong sales forces in Canada that we can combine with and build on for further growth. And this will certainly not be the last step for growth in Canada because we see here unique opportunities for Wienerberger to grow. Let's move to the U.S. In the U.S., we have actually 2 main areas where we will be focusing on. First of all, let me start with the West. West, in our definition, is obviously all the region from Denver down to Texas. With this acquisition, we moved in a clear #2 position in this area, and again, in masonry products, a clear innovation leader because, obviously, our colleagues are more focused on traditional facing brick. Why I do say this? Because, obviously, we have now the highest capacity and are the leading producer of slim brick in the U.S. Slim brick is a growing segment to be used in commercial applications, together with concrete panels, especially for big football stadiums, for public buildings like schools or hospitals or other applications and for renovation especially, renovation, do-it-yourself, but also on a big scale because you are absolutely aware of the big storms in the U.S. that are currently damaging a lot of houses and where vinyl is not the suitable and sustainable material. Therefore, our solutions for renovating these houses that make them storm-resistant and, by the way, also from a climate perspective, more performance is the right one. So with our locations in Texas and in Colorado, we can serve this market and deliver the product in these growing markets. Keep in mind also that especially the areas in Texas where we are active are growing ones. We have a good, a very excellent industrial footprint there and where we can grow on. And obviously, with our expertise, Wienerberger general share expertise, we can sort of debottleneck the existing locations, make them more efficient and also from an ESG perspective, improve their performance overall as we speak. So again, an exciting opportunity to get a strong foothold in the biggest facing brick market of the U.S., meaning Texas, and with the opportunity to grow there substantially on an organic level. Then we will obviously have our own brands in this region as well. We will not continue with Meridian. We see that our brands that we have currently and a brand called Red River Brick will be utilized in this area because it's closer to our customers. We will also apply all our digital solutions that we have successfully tested in the eastern part of the U.S. and will increase our presence there also on the direct sales activities in Texas and the surrounding states. Then let's move in the region of East, the Southern and Eastern states of the United States. Obviously, already General Shale had a strong presence there. And together, the combined presence with the old Meridian activity is -- creates a very, I would call it, a powerhouse in masonary products in this area. So we will build on this in order to successfully create a very modern and very future-oriented product range for the applications, as I said earlier, in renovation, in new build, in the commercial applications when we talk about public buildings, especially to have here the right solutions, and also with respect to infrastructure. You know that we have a very big plan in piping in this area performing very well as well. So all in all, a very strong presence that will focus on optimizing our industrial footprint, rebranding, as I said, and streamlining our commercial activities and a very strong focus on ESG improvement throughout our operations that we have successfully implemented also already in our existing Wienerberger operations and very lean back office functions that are coming out of the Eastern part of Tennessee where we have our current headquarters. And again, I hand over to Gerhard, who will sort of give you a little bit of the update where we want to end with our EBITDA potential, right, Gerhard?

Right. We -- I think we still see -- this, I think, is important mention, we see this significant potential for further profitability. What Heimo mentioned, there is not only to harmonize and to take out synergies out of the back-office functions, I think the more important thing is to optimize the supply chain from the plant network optimization, to harmonize the commercial strategy. And out of that, we stand to our promise that we will see in the next 3 years in EBITDA potential of more than $120 million, what we already communicated also in December last year. As also, the operational business is developing stronger than we expected. We confirm the target EBITDA potential of more than EUR 120 million until the next 3 years, which means in 2024.

And again, I think we need to mention, Gerhard, it is after remedies already. So we consider this after remedies, yes?

Exactly. Thank you. Good. I think we spoke about the product portfolio, the commercial rationale behind. Let me elaborate a little bit more on the purchase price. As Heimo mentioned in the beginning, this acquisition we see as financially very attractive. And you see, we have a cash multiple which is in -- around the 4, which is, I think, uncomparable. So when we compare the multiples, what we see in the States and what we see for comparable transaction. We ended up with a net cash purchase price of $230 million for the assets, for the whole acquisition of the U.S. and Canadian Meridian business. We get for the remedy package, $23 million, which finally ends to a net cash out of around about $200 million as net purchase price. We expect after 3 years a contribution from the Meridian assets of $50 million, which finally aims to this, I think, outstanding cash market which is around 4 times. And I think what is also important to mention is that our ratio of net debt-to-EBITDA by year-end for the group stands also after this acquisition below 2x at year-end. What are the next steps? The next steps -- basically at the acquisition, the closing of the acquisition took quite a while. I think we are perfectly prepared for a fast integration process. So we already started with the first integration steps. And we will keep going with integrating the assets of Meridian as quick as possible. And I think important to mention also, secondly, is the disposal of the remedy assets. We have now a time frame of 30 up to 60 days. That also the second transaction -- the second -- it is basically a second transaction will be closed after 60 days, the sell-off to the buyer of U.S. Bricks.

Well, I think this completes a little bit our sort of summary on this deal. We are excited, as I said. It's one of the biggest deals that we have done in the history of this company, especially in the last 15 years. And again, I can only underline the fact that we, as management, again, have been very disciplined on the M&A front which, as Gerhard has explained in detail now, shows that we will create significant, not only synergies, but in performance improvements throughout the business. And with Meridian cash contribution of about EUR 50 million a year from this business shows that with a multiple of 4, we are substantially below multiples that have and been are currently paid in North America. So this high degree of discipline creates a lot of value for our shareholders. We are thrilled and excited that we will build on this basis an even stronger North American business and grow it further. To anticipate your questions with respect to future growth, there's plenty of potential out there. We have a good underlying market right now in the U.S., obviously, taking advantage of a growing housing market, of a very sort of sustained spending in infrastructure. Our running rates in -- also in the third quarter are very strong and continue to be strong. So we look with optimism into the next year, obviously, with the combined business. Gerhard and myself will be traveling in the next 2 weeks to the U.S. in order to sort of get everything together with the local management on the integration front because, obviously, acquiring and closing a transaction is one. And the other one is then obviously getting their synergies and obviously, the integration not only starting but going and obviously, effective already from next year onwards. So these are things that are very exciting for us. We can position Wienerberger's activity completely differently because we have a stronger base now with a lot of innovation and a lot of new solutions, as I said, especially for the renovation market as well as for the commercial one in the U.S. So this brings us into a very different situation than we have been in the past, stronger, more diversified. And if the new residential housing market declines a little bit where I don't see any reason why it should in the next foreseeable future, but we have here then a stronger other business that can sort of balance this out and be more resilient. So again, from an all over perspective, a very good move for Wienerberger, strong in order to enhance our profitability and make our North American business much stronger. So for the moment, I think this summarizes our activity around Meridian and the closing of the transactions. And we are obviously ready to take your questions with respect to this transaction.

[Operator Instructions] And the first question comes from the line of George Speak of Exane BNP Paribas.

Hopefully, you can hear me. So just one question for me for now. So just given the low price tag, obviously, this, as you said, is a great deal with a great multiple. But could you give us a bit of color about how much of that asset base might need reinvesting in modernizing? And does that have any impact on your CapEx guidance going forward?

There's a clear answer to this. And thank you very much for this question. I should have answered it in my presentation. But due to the fact that we had so much time to investigate and to do our due diligence, I'm very pleased to say that the former owners invested well in the business. We have no backlog at all. And therefore, we can run these units and the asset base 100%. And there's no sort of change in our future guidance with respect to CapEx obviously. And I always said it, if Wienerberger grows with respect to an asset base, we will also grow our CapEx, maintenance CapEx as such. But for the moment, there's no need for further or whatever called backlog maintenance CapEx.

Brilliant. Just a quick follow-up on that. And will you take -- will there be any sort of rationalization plan as you sort of start using these assets and start running them at full capacity? Or are you kind of happy with the asset footprint that you have post acquisition?

I think from the short presentation that we provided you with and you find on our website, you can see basically that in the regions, West and North and Canada and East, from an overlap perspective, the most overlap is in the East, yes? And step by step, I think that has been always case within our company that we look at optimizations and further improvements in performance enhancement and then you will see us move on this. But there's no substantial one. And I think from a restructuring cost perspective, there's nothing that you should sort of take into consideration. For the moment, it is substantial.

The next question is from the line of Brijesh Siya of HSBC.

So I have 2 questions. The first one is with remedial measures. So what kind of revenue impact? I know you're talking about EBITDA being a similar level in third year. But does that have any revenue impact? Is that similar to the consideration you're getting almost 10% of what you originally agreed to?

I'm awfully sorry. When you spoke, the line dropped a little bit. Probably could phrase your question a little shorter and once again so that we can hear all of it. Sorry.

Sure. Sure. I'll do that. No worries. So what's the impact on revenue from the remedial measures?

You mean the revenue impact?

Yes.

After -- the revenue impact of the remedies is around USD 70 million, 7-0.

Okay. Okay. Okay. And what kind of revenue and EBITDA contribution you are expecting for 2021?

For 2021, we expect around USD 10 million.

Okay. And thirdly, on this asset rationalization, I previously recollect when you announced the deal, you talked about restructuring cost of around 10 million and some asset sales, which might bring you a couple of 10s of millions as a cash impact. Is that the same thing right now? Because the last question you answered talked about no more restructuring costs, so if you could just clarify that.

As I said to your colleague, for the moment, I think from a capacity standpoint and demand standpoint in the U.S., we need all the capacity that we have available to satisfy the demand level. If it changes a little bit and if we see further optimizations that can be achieved throughout the network, we'll do so. But it's not immediate, yes? So there's nothing to be planned right now for this, yes? So I think we can take this as an assumption. And as we move on, and as I said, when you look at Wienerberger and our -- for example, over the last decade, when we close certain factories and we bring the capacity to others, then we sell off the real estate and then you will get some sort of inflow from these sales of real estate. But for the moment, we keep the sites that we have available and use them.

The next question is from the line of Tobias of Stifel Europe.

Yes. Congratulations on what seems to be a big deal. Just to follow up on the number side of the equation. Can you give us a sense what the 12-month run rate is of those Meridian assets you're keeping in terms of revenues as well as EBITDA, just to get a sense? And also, did I understand correctly that there's no further asset disposals envisaged? There's no surplus land or anything else which you could crystallize? And then with regard to the working capital, third question, what sort of -- or is there further potential to reduce that possible? And then just lastly, you got your feet on the table in the U.S. now in North America with this transaction to make you really the leader in the country. Where do you see your piping business go or piping solutions business go in the U.S.?

Obviously, you have asked a lot of question, Tobias, as I expected you to do so. Let me just take the strategic one first and then work together with Gerhard our way to the more operational ones. From our perspective, we see -- as you have seen in Europe, we move through the business and now creating a masonary sort of leading company in North America, Canada and the U.S. In regional markets, we want to consolidate this position over the, I would call it, next 5 to 10 years. Being a solution business also in the housing and renovation, there are a lot of applications that we can think of and where we can certainly use our European expertise as well. The energy performance in housing is not the greatest one in the U.S. So here, we see potential either on the roof, in the facade or also on the walling side, more intelligent solutions, smaller solutions, accessories, et cetera, that we could sell with our current portfolio. So I think if you were listening earlier, I was very excited when I talked about Canada. I was excited about the Texas region that is growing. So there's a lot of things to be done. And you have seen -- and just sort of giving you some hint when you look at the recent acquisitions of Wienerberger in especially in the U.K. and Ireland where we are focusing on from rain to drain, if I may say so, where with water management around the house and with the house, so a lot of areas in the U.S. have the same issues. And probably here, we can move the business also further, not only focusing on infrastructure and being sort of dependent on infrastructure spending, but also in these areas of applications around water management. So these are some thoughts. They are obviously preliminary thoughts. But this, as you can see, Wienerberger is very consistent in our approach, and therefore, will sort of create a stronger business over the years to come also in North America. So this would sort of talk about the piping business and the future growth. You were saying something also to the working and capital running rate?

I think I fully agree. We see also the potential to further optimize the working capital in the combined business. I think it is logic looking to the footprint what you also have seen on the map that there is optimization potential when it's about logistics, production planning to further basically optimize the whole plant network, especially in the Southeast of the U.S. I think here, we see the potential for further optimization also on the working capital side. And I think one question was also about the performance of the piping business.

No, the running rates of Meridian.

Correct. The run rates of Meridian.

Yes. Meaning the whole year, sort of what they achieved.

They basically had -- I think the figures are officially or they are public available basically. They have a financial year which ended with half year. So the financials of 2020/'21 are published. And they basically will -- they realized an EBITDA, which was in the range of USD 35 million for this year '20 to '21.

And this is before the...

Before the remedies.

The remedies, yes.

The next question is from the line of Ami Galla at Citi.

Just a couple from me. I was wondering if you could give us some color in terms of the brand positions, the relative brand positions of Red River versus Meridian. And is there a sort of a price differential as you -- that you benefit from as you kind of retain the broader edge of a brand versus Meridian? Also in terms of the thin bricks versus the facing bricks, is there any difference between EBITDA margins between these 2 product ranges? Or are you -- what you're really talking about is really broadening the portfolio to your existing customer base?

First of all, your second question -- thank you very much, it broadens our customer base because it gives us access to new markets. So what we are really doing is growing our business organically. And obviously, you are right also from a margin perspective, the slim bricks have a higher margin than the traditional bricks, yes, because they are easier to install and we install them basically with the system. And when we talk about renovation and the renovation system, it gives us here an access to a new market with a new pricing potential. So again, I think we will elaborate a little bit more in detail on the Capital Markets Day so that you have a better understanding where we want to head with our North American operations. But this is strategically, obviously, a compelling story. And then your second question was related to the -- sorry.

The brands.

Brands.

The brands, yes. And the brands, the differential in pricing and what we have seen in North America was already a couple of percentage points, if I may say so, between 3% to 10% from -- depending on the product range. But I think when you take it as such, it's not 10% all over. So it is, I would say, very cautious. But between 3% and 5% was the pricing sort of that we realized as the market leader and with respect to our premium products and the branding.

The next question is from the line of Miro Zuzak of JMS Invest AG.

Yes. Can you hear me?

Yes, perfectly well.

I take them one by one, if I may. The first one, in December, when you announced the acquisition, you already -- you also said that you expect around USD 50 million from the sale of noncore assets. Is this still the case? Do you still expect the USD 50 million from the sale of noncore assets.

As I confirmed to your colleagues who was asking the same question, I said, have no reason not to do that. It will take probably a little longer because we are running full speed right now with our capacity and closing down and shutting down sites at this very moment.

Then secondly, you had this closed box system. So basically, the cash or the business -- you already basically had the risk of the business since the -- since basically the announcement of the acquisition. How much was the positive cash flow from the Meridian Brick since December basically?

As you mentioned, there was a lockbox mechanism agreed in the SBA. And we got the USD 20 million basically as a cash contribution during closing.

Then the USD 50 million potential that you see, how much of synergies are in this USD 50 million? And how much is basically growth and market growth and business growth?

Well, I think from a market growth perspective, we don't put market growth in our analysis, so that you understand this. We don't -- otherwise, you sort of can put everything you want. So we stay stable. We foresee obviously no major changes for the moment, yes? That we understand each other there very well, yes, because we can't change the market or influence the market. The only thing we can influence is the synergies basically and commercial synergies, meaning pricing. So when we look at the current performance and what we expect from this coming through, you can calculate very easily because my colleague has given you the numbers for performance of Meridian. That is without remedies, 35. You deduct remedies, we gave you a sort of not an indication there, but you can deduct some millions from these assets that we have to sell, and then you obviously have the performance that we can realize through optimization and through synergies. So if you situate yourself a little bit under 30%, and you see the USD 50 million, you have USD 20 million that comes from this sort of optimizations, synergies and others and growth of the business, but without something which I don't see as something which we should calculate upon when you do a payback coming from market growth because market growth can change every year.

I think...

Are we in agreement on that?

Yes. That's fine. No, thanks a lot for the question. You have answered it perfectly. I have small ones -- 2 small ones. First of all -- or actually, I think one left -- no, 2 left, sorry. Meridian Brick, you mentioned the level '19/'20, so mid-'19 to mid-'20, but that was like the lockdown year. What it a similar $35 million the year before? Or was it much lower in '19, '20?

Lower.

It was lower. And the figure what I mentioned was 2021, yes? The 35 what I mentioned before.

And what would be a kind of a normalized level or what has been a normalized level?

There was no normalized level because this is a joint venture that came about, about 2 years ago. So this is a new animal, if I may say so, yes? So it was -- it had its low performance. And Gerhard made reference to a normal year, the first normal year of this joint venture, which ended on June 30 of this year.

Okay. cool. And so one last one left. The U.S. business is doing very strong at the moment. I mean you see what's happening on the energy front, on the pricing front, and everything is going up. So the 330 million that you probably mentioned last December, they are probably something like 360 million or even 370 million at the moment. Can you give us an update on what's happening there right now? And what the new pre-remedy sales level is in 2021?

I think from our perspective, we've never given and it's very difficult to give sort of guidance on turnover levels, yes? When we guided for Wienerberger, we guided for the whole group and not for North America. You're absolutely right that, obviously, the first half has been a very strong one. We continue to having good running rates in the third quarter, as I said earlier, also in the U.S. and especially from our piping segment because infrastructure is doing very well. And we have a very positive effect from raw material prices there, for a change. The overall gas situation, when I can sort of say a word on this and I speak under the control of Gerhard, is we are hedged on this front.

Right. I think we mentioned that and communicated this already earlier. We are hedged for this year, but also for the next year. As you know, that energy prices are totally were doing crazy, if we're allowed to say that in that way. Because I think we're in a comfortable situation with hedged volumes, hedged prices and have also planning certainty. And this also brings us in a comfortable situation when we speak about cost inflation, coverage of sales prices of our cost inflation.

The next question is from the line of Roland Vetter of Praxis Partners.

Follow-up actually on what you just commented on energy prices. Especially in Europe, we have seen a very big increase in energy prices. I think it's less in the U.S. It's very good that you are hedged. Can you maybe just give us the numbers about what percentage you're hedged for '22 and '23? And then more important, do you have an idea about how your competitors are hedged? Do they have a similar hedging level than you? Or if not, would you expect some price increases on the back of that one, which then would be a net positive for you as very well-hedged company?

Maybe let me start with how much is hedged for 2022. It is almost 100%. We are hedged above 95% for the next year. And this is what I mentioned also for 2021, we are fine. And for the next year also, we are hedged for almost 100%.

And '23?

No. As we -- let us focus on '21 and '22 for the moment. I think from our perspective, it's very important to note that when we talk about hedging, it's for our building solution or brick business only where we use natural gas. Secondly, our competitive landscape is a very different one because it's family business. It's 1 site, 2 sites. So we don't keep -- we don't have an intelligent service that keeps us updated who is hedged for what. Some are on spot. In certain areas of Europe, we can't hedge either. So there are certain countries that we're -- doesn't allow the hedging or don't allow the hedging. So there's a multitude of approaches. Certainly, some companies will see stronger impact on the price increases from this energy front than others. And for Wienerberger, I think we are in a good position in order to sort of tackle the issues for '22 coming our way because as correctly Gerhard has pointed out, we are hedged with 95% of our sort of demand level that we have for energy.

Okay. And what do you expect on the increasing energy prices that there will be some above-normal increases in prices next year? Because competitors do not have as much hedge as you are and you will see some price increases. Is there already some talk about it? Or do you see some indications?

First of all, I must make clear on such a call, which is accessible to all authorities around the world that Wienerberger is not having any discussions with anybody, yes? And nothing like this takes place because we are not engaging in such discussion. We do our own commercial policy. And this is very important that I underline this 3 times, yes? We have been setting our prices over the last years in a way where we cover cost inflation. I think we've made this very clear. We'll do it also for to '22 again. And what the other competitors are doing in the building material areas, that's up to them.

The next question is from the line of Gregor Kuglitsch of UBS.

A few just clarification questions. So essentially, what you're saying is the business is going to make 30 million of EBITDA, give or take, post-remedies now and you think it can make 50 million on a 2- to 3-year view, right? If I remember correctly at the time, you kind of called out the revenues at the time to be around 400 million. And now you have to take 70 million off that. I just want to understand if that's the correct understanding because there was one mention of a 10 million contribution next year. Maybe that will see incremental synergies or something like that. But if you could just clarify on that, please?

I think we have to clarify one thing that you mentioned at the end, the 10 million is the contribution on the EBITDA level this year, 2021.

So that's just for the final quarter. Okay. I understand. Okay. So in principle, if I look at consensus this year, it seems like people have EUR 65 million. For the U.S., that's maybe $75 million. We add $30 million, so you're kind of starting base to get to that $120 million, let's say, it's $100 million, $100 plus million. Just to pro forma, the business is making around $100 million, call it, and do you think that can go to $120 million, assuming flat housing starts, if I understand that correctly?

You're absolutely right in your assumptions. There's one thing I would like to add that the infrastructure business is doing extremely well due to the fact that there's a lot of money pumped into this part of the economy in the U.S. So I would say this is -- and also from a raw material price, we had a very positive effect. So I think here, you have to be a little bit more cautious when you take $100 million as the baseline.

Okay. So you're saying this year, perhaps is a little bit inflated for that reason? Okay.

Yes, for this reason.

How does that convert into margin? So if we say 100 -- I think from memory, when I look back at the initial presentation, you were sort of saying $800 million. So that suggests normalized, you're talking about this business being around 15%. Is that correct?

Yes. I think what our own targets are that we move above the 15% step-by-step in North America due to the upgrade in products and this, so I would say that from a perspective of further margin improvement, we move towards a higher number than 15%.

Okay. And then a final question -- well, sorry, one detailed question. If you could just tell us post all the remedies and with purchase price accounting and so on, what you expect the depreciation to be on the asset, that would be helpful. And then finally, I see in your presentation, you're talking about being sub-2x leverage. I mean my perhaps rather crude math, probably not as sophisticated, as you would suggest that you're going to be closer to 1.5 than 2. I just want to see if you have any major disagreement with that idea.

It's basically what we expect for the end of this year. We'll be around about 1.8, 1.9 what we see on -- and I think we guided this also with half year closing. I think that we gave an indication in case we have [indiscernible] in case we have the closing of Meridian and the disposal of the treasury shares, I think we guided this that it will be around 1.8, 1.9.

I think, if I may, probably you should take into consideration that we carried successfully out and completed the transaction of Cork Plastics and -- plastics in the U.K. and Ireland also.

Which was 150 roughly?

Yes. Correct.

And the D&A? Sorry.

Sorry. Go ahead.

The depreciation charge, yes, if you could help me.

For the depreciation charge, we have to calculate. I think we started the purchase price allocation where we also define the fair values of the fixed assets of the industrial base and out of that and due to the depreciation rates, what we will define within our accounting principles, then we will get also a depreciation charge. So we still need some more time. Most probably, with quarter 3 or latest Capital Market Days, I can give you more guidance on that.

The next question is from the line of Adrian Cattley of CapeView Capital.

It's fine. My 2 questions have been answered.

Thank you very much, indeed.

And the next question is from the line of Cedar Ekblom of Morgan Stanley.

Just one question from me. Aside from the synergies or the remedies that you have to dispose of, are there any other revenue dis-synergies that we should be thinking about? In other words, are there any customers of Meridian that are also customers of your own businesses that have potentially thought about shifting their supply to alternatives now that the businesses will be combined?

No. Thank you very much for this very good and strategically important questions. I know actually from all the discussions we had, the North American management and we with the top clients, they are not only supportive, they're enthusiastic. And I must say with the strong portfolio that we have and provide to them in the future, it will be actually a bit -- little bit of positive impact and not a negative one. So I'm sure that we can handle this very well with our existing client base. And our management has to be -- has proven to be very good and strongly linked with our client and customer base. So I'm very optimistic that we gain momentum and we don't lose momentum there. There's no slippage rate or whatever you call it.

And there are no more questions at this time. I would like to hand back to Elisabeth Falkner for any closing comments.

Thank you very much, operator. Ladies and gentlemen, thanks very much for dialing in today. The next conference call will be on November 9 for our Q3 results. I would also like to take the chance today to invite you to our Capital Markets Day on November 25. Invitations will be sent out shortly. So today, I can only wish you a nice remaining afternoon. Thank you very much for dialing in again, and goodbye.

Ladies and gentlemen, this concludes the Wienerberger conference call. Thank you for joining, and have a pleasant day. Goodbye.