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;
mike.barris@dowjones.com