Tenneco profits slip on restructuring moves
Supplier Tenneco, which counts on Europe for about a third of its global sales, saw its first-quarter net income slip 15 percent to $46 million because of one-time restructuring costs.
If restructuring expenses were excluded, the company said its net income would have jumped 27 percent to $56 million, citing stronger-than-expected commercial vehicle profits.
Tenneco also reported record revenue of $2.09 billion during the quarter, up 10 percent from the same period a year ago. The gain was driven by an 11 percent increase in business from its various exhaust and emissions-reduction products and a 7 percent boost from ride control products such as shock absorbers.
CEO Gregg Sherrill, in a Monday statement, said the company plans to improve profitability “with a slightly stronger light vehicle production environment and incremental revenue from the growing commercial truck and off-highway equipment business.”
“We continue to improve profitability and delivered significant margin improvement by leveraging our top-line growth with strong operational performance,” Sherrill said.
In a related matter, Tenneco CFO Kenneth Tramell told analysts the company is anticipating costs of $3 million to $5 million per quarter to deal with antitrust investigations in Europe and the United States, according to a report from Wells Fargo analyst Rich Kwas.
In March, European Union antitrust regulators raided Tenneco and several other auto exhaust systems makers suspected of price fixing.
The European Commission said the companies may have taken part in a cartel and abused their market dominance, but did not name the companies or the countries where the raids took place.
Tenneco also disclosed it received a related subpoena from the U.S. Justice Department, which has been investigating price-fixing in the U.S. auto industry for the last few years.
"The company is fully cooperating with the authorities and cannot comment further due to the ongoing investigation,” the company said at the time.
Tenneco ranks No. 36 on the Automotive News Europe list of the top 100 global suppliers, with worldwide parts sales to automakers of $6.1 billion in its last fiscal year. Europe account for 31 percent of those sales.
Reuters contributed to this report
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