Tenneco loss narrows as automakers raise production

Tenneco Inc., the world's largest maker of vehicle-exhaust systems, said its third-quarter loss narrowed to $8 million as automakers boosted production.

The net loss shrank to 17 cents a share, from $136 million, or $2.92, a year earlier, the Lake Forest-based company said today in a statement. Sales fell 16 percent to $1.25 billion.

Tenneco customers such as General Motors Co. built more vehicles, partly because of the U.S. government's so-called cash-for-clunkers incentive program. The company said it restored salaries Oct. 1 for employees that had taken a 10 percent pay reduction April 1, creating $7 million in savings in the second and third quarters.

"This salary-cut reversal is a strong sign of management's belief in not tripping covenants," Himanshu Patel, a New York- based analyst with JPMorgan Chase & Co., wrote in a note to investors. The analyst, which rates the supplier "overweight," had been concerned it would breach loan terms.

Excluding one-time costs for restructuring, Tenneco's per- share profit was 7 cents, the company said. That beat the 3 cents per share average of 7 analysts' estimates compiled by Bloomberg.

Tenneco rose $1.05 cents, or 7.8 percent, to $14.56 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have more than quadrupled this year.

The company had $390 million in unused borrowing capacity, compared to $328 million in the same period last year, the company said in a slide presentation. The company is not in danger of breaching loan terms, according to the presentation.

Tenneco, which posted a fifth straight loss, has closed three North American plants in addition to the salary cuts.

"The actions we have taken to help counter overall weak industry conditions helped improve our profitability this quarter," Chief Executive Officer Gregg Sherrill said in the statement.

Sherrill said the company expects "more positive overall production" in the fourth quarter and next year.

Tenneco makes products such as mufflers, tailpipes and shock absorbers. The company got 81 percent of its revenue from vehicle makers last year and the rest from replacement parts, according to a Sept. 9 slide presentation.