Tenneco 3Q Loss Narrows; Salaries Being Restored

Tenneco Inc. (TEN) posted a narrower third-quarter loss as cost cutting raised the auto-parts maker's margins and the prior year had hefty tax-related charges.

The company also said that as of the start of this month, it has begun "restoring salaries" for all salaried employees world-wide. The salaries were slashed about 10% in April and produced savings of about $7 million in both the second and third quarters, Tenneco said.

Shares fell 2.7% premarket to $13.15 as earnings excluding charges topped analysts' expectations but sales fell just short. The stock has more than quadrupled this year.

Auto suppliers have struggled as automotive production sagged, particularly in the U.S. and Europe. But Tenneco's recent margin improvements suggest its restructuring efforts are helping it weather the economic downturn.

Chairman and Chief Executive Gregg Sherrill said the company expects to see higher auto production in North America and Europe this quarter from the third quarter as sales creep higher from multiyear lows.

Tenneco, which makes shock absorbers, suspensions and manifolds, said its loss narrowed to $8 million, or 17 cents a share, from $136 million, or $2.92 a share, a year earlier. Excluding items, including last year's write-down of credits the company could have used to offset future income taxes, earnings rose to 7 cents from 1 cent.

Net sales dropped 16% to $1.25 billion, with 10 percentage points of it due to currency changes.

Analysts polled by Thomson Reuters predicted earnings of 4 cents on revenue of $1.26 billion.

Gross margin rose to 16.8% from 13.3% on the cost cutting.

Tenneco was among four auto suppliers that avoided a Fitch Ratings downgrade of junk ratings after Fitch said in August that the bankruptcies of General Motors and Chrysler Group LLC proved less disruptive than feared.

-By Mike Barris, Dow Jones Newswires; 212-416-2330; [e-mail]