LAKE FOREST, Ill. – Tenneco Inc. has reported second quarter net income of $63 million, or $1.02 per diluted share, compared with net income of $87 million, or $1.42 per diluted share in second quarter 2012.
On an adjusted basis, net income was $68 million, or $1.10 per diluted share, versus $70 million, or $1.14 per diluted share a year ago. Tenneco said the decrease in net income and earnings per share was more than explained by a higher year-over-year tax rate.
Total revenue was $2.067 billion, up 8 percent from prior year, driven by revenue increases in both the Clean Air and Ride Performance businesses. Clean Air revenue increased 10 percent to $1.406 billion, on stronger light vehicle production in North America, China and South America as well as revenue growth in both the light and commercial vehicle businesses in Europe. Ride Performance revenue rose 2 percent versus prior year to $661 million, largely driven by strong light vehicle production in China, the company said.
Value-add revenue (revenue excluding substrate sales) was $1.579 billion, up 6 percent year-over-year.
“We delivered another solid quarter with top-line growth in both product divisions driven by stronger global light vehicle production, higher commercial vehicle revenue in Europe and South America and a solid contribution from our global aftermarket business,” said Gregg Sherrill, chairman and CEO, Tenneco. “I am also pleased that we delivered record-high EBIT and adjusted EBIT. In addition, our outstanding effort in managing working capital drove our best-ever second quarter performance for generating cash from operations.”
Global OE light vehicle revenue increased 10 percent year-over-year to $1.483 billion with light vehicle growth in nearly all regions due to the ramp-up on new programs and leveraging higher industry production with a strong platform mix. OE commercial and specialty vehicle revenue increased 5 percent to $237 million in the quarter, compared with $226 million a year ago. The increase was due to commercial vehicle revenue gains in Europe and South America. Global aftermarket revenue increased 1 percent to $347 million.
Outlook
In the third quarter, IHS Automotive forecasts a 4 percent increase in global light vehicle production versus a year ago with both North America and China increasing 8 percent year-over-year. South America is expected to be even with last year and production declines of 3 percent are expected in Europe.
Tenneco says it is well-positioned to capitalize on the stronger global light vehicle production environment with an excellent platform mix, the continued ramp-up on new programs and a well-established footprint in the fastest-growing markets.
In general, the global commercial vehicle market remains relatively weak. There is modest demand improvement in certain areas; however, inventory corrections are still expected to impact production levels. The company anticipates its commercial vehicle revenues for the next two quarters will be relatively flat compared with the second quarter, bringing full year revenues within the lower end of the company’s previously announced range.
“While industry conditions globally are somewhat mixed, I am pleased with our performance through the first half of the year,” said Sherrill. “For the remainder of the year, our Clean Air and Ride Performance businesses are staying focused on improving operating performance and driving profitable growth. With this focus, we anticipate continued improvement by capitalizing on stronger light vehicle production and our global position in the commercial vehicle market.”
