LAKE FOREST, Ill — Tenneco has reported first quarter net income of $6 million, or 13 cents per diluted share, compared with $5 million, or 11 cents per diluted share, in first quarter 2007. Adjusted for the items below, net income was $10 million, or 20 cents per diluted share, even with a year ago.
"We faced the most challenging North American industry conditions we have seen in a long time, marked by lower OE volumes including the impact of the American Axle strike on significant Tenneco-supplied GM platforms,” said Gregg Sherrill, chairman and CEO, Tenneco. “We took immediate steps to flex down our operations in response to these volume declines. Our results also reflect our continued progress toward greater geographic balance – highlighted by significant profit improvement in our Europe segment and ongoing growth in Asia – and the benefit of our variable rate debt strategy that lowered interest expense."
The company said first quarter revenue increased 12 percent to $1.56 billion, driven by favorable currency exchange rates and growth in the Asia Pacific and South America regions. Revenue in the quarter was negatively impacted by industry production volume declines in North America and the American Axle strike. The company estimates the strike resulted in lost revenue of approximately $50 million on key Tenneco-supplied GM platforms. The quarterly revenue growth included an increase in substrate sales to $421 million from $343 million in first quarter 2007. Excluding substrate sales and the benefit of $114 million in favorable currency — primarily the strong Euro — revenue decreased 1 percent from a year ago.
Tenneco said it expects little change in general industry conditions throughout the remainder of the year. In North America, Tenneco anticipates OE production volumes to remain down year-over-year; however, the company anticipates a mix improvement in North America as current labor issues within the industry are resolved. Current production schedules indicate that Europe will remain relatively stable in the second quarter, and that growth markets in South America and Asia should continue to expand. The company also expects some softness in the global aftermarket.
"Tenneco has a solid record of overcoming industry challenges by taking a disciplined approach to cost management and driving the organization to operate as efficiently as possible," said Sherrill. "We are better positioned today to weather these downturns and, as we did in the first quarter, we will take the necessary steps to bring down our costs and manage through market challenges."
"The good news is that the current industry challenges have not impacted the fundamentals driving our mid to long-term growth opportunities," Sherrill said. "Tightening vehicle emission regulations worldwide continue to generate new emission control business and broaden our market balance through further penetration of the commercial vehicle segment."
For more information about Tenneco, go to: www.tenneco.com.
