LAKE FOREST, Ill. — Tenneco Inc. has reported second quarter net income of $50 million, or 81-cents per diluted share, versus net income of $40 million, or 66 cents per diluted share in second quarter 2010.
Total revenue in the quarter rose to $1.888 billion, up 26 percent from $1.502 billion in second quarter 2010. Value-add revenue (revenue minus substrate pass thru sales) was $1.453 billion, a 21 percent increase versus $1.198 billion a year ago. Industry light vehicle production was up 2 percent year-over-year in Tenneco’s operating regions. The revenue increase was driven by higher OE light vehicle production volumes; the launch of new commercial vehicle emissions control business, which drove a 64 percent year-over-year increase in commercial and specialty OE revenue; and an increase in global aftermarket sales. The estimated revenue loss in the quarter due to the Japan earthquake was about $60 million. Revenue included $118 million in favorable currency.
“We are making excellent progress on growing our businesses, particularly as we launch and ramp-up commercial vehicle emission control programs, which contributed to our record-high quarterly revenue and earnings,” said Gregg Sherrill, chairman and CEO, Tenneco. “We are also pleased with our robust growth in emerging markets including China, where we are investing to keep pace with expanding opportunities.”
In the second quarter, Tenneco announced plans to repurchase up to 400,000 shares of the company’s outstanding common stock to offset dilution from shares issued to employees in 2011. At quarter-end, the company has repurchased 270,500 shares on the open market for $10.5 million.
According to IHS Automotive forecasts, industry light vehicle production in the third quarter is expected to increase year-over-year in the regions where Tenneco operates. Light vehicle production is expected to rise 6 percent in North America, 5 percent in Europe, 1 percent in China, 7 percent in South America and 3 percent in Australia. These forecasts include the initial recovery from the impact of the Japan earthquake as the supply chain returns to normal.
In addition to capitalizing on recovering light vehicle production volumes, the company says it is continuing to launch and ramp-up incremental commercial vehicle emission control business to help customers meet stricter diesel emissions standards for on-road and off-road vehicles. Tenneco is launching these diesel aftertreatment programs with 13 commercial vehicle and engine manufacturers globally including new programs that will launch in Europe and Brazil later this year.
“Tenneco’s growth drivers remain unchanged. Our revenue has outpaced industry growth rates due to our strong position on top-selling vehicles and the continued ramp-up of new light and commercial vehicle business. In addition, the North America aftermarket business continues to make solid contributions,” said Sherrill. “We are pleased with progress on our program launches and top-line growth. At the same time, we are focused on several areas to help improve our performance including price recoveries in the Europe aftermarket and South America businesses and continuing to adjust our operations in Australia to the market.”
