Auto supplier Tenneco has reported a fall in revenues and earnings in its fourth quarter as production fell, costs rose and unfavourable foreign exchange rates took their toll.
Go deeper with GlobalData
It said it was consequently taking cost-cutting measures that would see the axing of about 1,100 jobs and three plant closures.
Tenneco reported a fourth quarter net loss of US$298m, or $6.40 per share, compared with a net loss of $72m or $1.57 per share a year ago. Adjusted for items including non-cash impairment charges for goodwill and deferred tax assets, the net loss was $24m.
“The fourth quarter saw further vehicle sales and OEM production volume declines in North America, compounded by the dramatic fall-off in Europe and rest of the world due to the global economic crisis and ongoing credit freeze, which has driven every major economy into recession. As with the entire automotive industry, Tenneco has been significantly impacted by these severe and unprecedented external conditions,” said chairman and CEO Gregg Sherrill.
EBIT (earnings before interest, taxes and minority interest) was a loss of $145m versus earnings of $43m a year ago. The company said that EBIT was negatively impacted by the goodwill impairment charge, lower OEM production volumes globally, lower aftermarket sales and higher restructuring costs, all of which were driven by the severe industry conditions.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIn addition, the global downturn drove “unusual changes” in currency exchange rates during the quarter, the company said, reducing EBIT by $21m.
Fourth quarter revenue was $1.208bn, down from $1.565bn in fourth quarter 2007.
“In response, we have and will continue to take aggressive actions to reduce costs, re-size our operations and generate and preserve cash in order to weather this crisis,” Sherrill said.
Tenneco noted that, during the fourth quarter, it announced a global restructuring programme expected to achived $58m in savings a year once fully implemented by the end of 2009.
It said restructuring would include eliminating 1,100 jobs worldwide, closing three manufacturing plants and one engineering facility – and “controlling compensation and benefits costs”.
Tenneco added that it would be eliminating 2008 performance bonuses for salaried employees, reducing total average pay for its top 50 executives by more than 60% and eliminating employee annual salary increases as well as implementing “other salary control actions”.
It also likely continue to implement hourly worker layoffs at its manufacturing plants worldwide and initiate unpaid furloughs and working hour reductions for some salaried employees to further adjust to declining production volumes.
“Cash preservation and generation remains our top priority and we continue to implement actions at all levels of our operations to improve cash flow and help ensure that we meet our liquidity requirements through our existing credit facilities,” Sherrill said.
Tenneco said it would not provide any revenue guidance due to the volatility if global automotive production.
“Future global OE production projections are just too unreliable at this time for us to provide guidance regarding OE revenue,” Sherrill added.
Full year revenues reached $5.916bn, down from $6.184bn in 2007.
Tenneco reported a net loss of $415m for the year compared with a net loss of $5m in 2007.
