Tenneco reports wider fourth-quarter net loss of $298 million

Tenneco Inc., the world's largest maker of vehicle exhaust systems, posted a wider fourth-quarter loss of $298 million and reduced annual pay for the top 50 executives by more than 60 percent on average.

The loss, which includes one-time costs and equals $6.40 a share, expanded from a net loss of $72 million, or $1.57, in the year-earlier period. The prior results included expenses related to plant closings and debt refinancing, the Lake Forest-based company said today in a statement. Sales fell 23 percent to $1.21 billion.

Tenneco's second straight quarterly loss comes as new- vehicle registrations in Europe, a region that accounts for almost half the company's revenue, fell along with auto sales in the U.S. The supplier said it's suspending matching contributions to 401(k) retirement plans and is eliminating 2008 performance bonuses for salaried employees to trim costs.

The latest loss "was better than expected," David Leiker, a Milwaukee-based analyst with Robert W. Baird & Co., wrote in a note to investors today. He rates the shares "neutral."

Tenneco rose 6 cents, or 3.4 percent, to $1.80 at 11:30 a.m. in New York Stock Exchange composite trading. The stock plunged 94 percent in the 12 months through yesterday.

The loss excluding one-time costs for non-cash expenses to write down the value of assets and tax adjustments was $24 million, or 51 cents a share, the company said. That was narrower than the 63-cent loss analysts expected, based on the average of 8 estimates compiled by Bloomberg.

Increased Debt

Tenneco's debt rose 5.6 percent to $1.45 billion on Dec. 31 from a year earlier, the company said. The supplier is continuing to try to secure a longer-term amendment to a credit facility "in anticipation of continued difficult economic and industry conditions," according to the statement. The company said it expects to complete the amendment by the end of this month.

The partsmaker reiterated a previous announcement that it is working to counter volume declines by closing 3 plants and an engineering facility this year and cutting 1,100 jobs globally to produce annualized savings of $58 million.

The company also is reducing capital expenditures 28 percent to about $160 million, the statement said.

"We have and will continue to take aggressive actions to reduce costs," Chief Executive Officer Gregg Sherrill said in the statement.

Sales by Market

Tenneco's fourth-quarter sales of original equipment to carmakers fell 31 percent to $352 million in Europe and dropped 16 percent to $498 million in North America.

Revenue from aftermarket parts, which isn't tied to new- vehicle purchases, declined 21 percent to $76 million in Europe, and 7.4 percent to $113 million in North America.

Sales to automakers represented 81 percent of 2008 revenue, Tenneco said. General Motors Corp., accounting for 20.2 percent of revenue, was its biggest customer, followed by Ford Motor Co., which contributed 12.5 percent of sales.

For the full year, Tenneco's net loss widened to $415 million, or $8.95 a share, from $5 million, or 11 cents in 2007. Adjusting for one-time expenses including restructuring costs, the company earned $20 million, or 42 cents a share, compared with profit of $88 million, or $1.82, in 2007, the statement said.

New-vehicle registrations in Europe fell 7.8 percent last year to 14.7 million units, a 15-year low, according to the European Automobile Manufacturers' Association.

The supplier said it wasn't making a revenue forecast "due to the extreme volatility in global automotive production."

CEO Sherrill said the company continues to benefit from stricter emissions regulations. Tenneco reported profits in the second and first quarters of 2008 partly on revenue from selling parts that reduce vehicle emissions in Europe and Asia.

The supplier makes products such as mufflers, tailpipes and shock absorbers.