Tenneco 4Q Loss Widens On Auto-Industry Downturn, Charges

   DOW JONES NEWSWIRES 
 

Tenneco Inc. (TEN) posted a wider fourth-quarter net loss, stung by auto makers' production cuts, as it took restructuring charges and wrote down deferred tax assets that could have been used to offset future profits.

Auto suppliers such as Tenneco and rivals Visteon Corp. (VC), American Axle & Manufacturing Holding Corp. (AXL) and Lear Corp. (LEA) are in a precarious spot as U.S. auto makers pare swollen inventories, particularly in North America. Chrysler LLC alone shut down 30 U.S. factories for a month in December.

Last-minute plant-idling announcements hit suppliers especially hard since many companies gear their output based on guidance provided by the auto makers weeks to months in advance.

"As with the entire automotive industry, Tenneco has been significantly impacted by these severe and unprecedented external conditions," said Chairman and Chief Executive Gregg Sherrill.

The maker of shock absorbers, suspensions and manifolds said its net loss widened to $298 million, or $6.40 a share, from $72 million, or $1.57 a share, a year earlier.

Excluding restructuring and acquisition-related charges and the tax-asset write-down, Tenneco swung to a loss of 51 cents a share, from year-earlier earnings of 34 cents. The write-down stems from the company's expectation that it won't be able to generate enough taxable profit soon enough to use all those credits before they expire and become worthless.

Net sales fell 23% to $1.21 billion as production dwindled, particularly in the company's North Americas and European control businesses and in China.

Analysts surveyed by Thomson Reuters were expecting a loss, excluding items, of 63 cents a share on revenue of $1.29 billion.

Gross margin fell to 12.6% from 14.3%, mainly on reduced volume and currency fluctations.

January U.S. auto sales plunged to their lowest level in nearly 27 years, as tight credit conditions and increasing job losses destroy consumer confidence. Some executives have said the U.S. auto retail market is showing signs of stabilizing. However, further declines could force auto makers and their suppliers to take additional steps to scale back production and cut costs.

Sherill said "cash preservation and generation remains our top priority" looking ahead.

Tenneco in late October announced a plan to cut 1,100 jobs, or about 5% of its work force, in a restructuring aimed at saving $64 million a year.

Shares closed at $1.74 on Wednesday and didn't trade premarket.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]