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;
mike.barris@dowjones.com