Carl Icahn-backed Tenneco shares rise on plans of cost cuts amid COVID-19 crisis
(Reuters) - U.S.
(Reuters) - U.S. auto parts maker Tenneco Inc on Friday reported a smaller-than-expected quarterly loss and said it would cut costs to be better prepared for any fallout from the COVID-19 crisis, sending its shares up 20%.
Several auto parts makers, including BorgWarner Inc and Visteon Corp, which were already struggling due to weak automotive demand in a slowing global economy, have reported steep declines in quarterly sales as coronavirus-led lockdowns forced automakers to cut production.
Tenneco, backed by billionaire investor Carl Icahn, makes parts such as catalytic converters that reduce pollution and optimize engine performance. General Motors Co and Ford Motor Co are its largest customers.
The company said on Friday it would close some factories, furlough workers, implement pay cuts and reduce capital expenditure, which would help it save $65 million by end of 2021 in addition to the $200-million savings plan announced earlier this year.
Tenneco, which is saddled with more than $6 billion in debt, got some relief earlier this week after its lenders changed the terms of a debt covenant.
"The covenant amendment to our senior credit facility... provides us with additional headroom to operate in the current economic environment," Chief Financial Officer Kenneth Trammell said on a call with analysts.
"We have no material debt maturities until 2022," Trammell said, adding that the company had access to $1.57 billion of funds that will allow it sail through the current downturn.
Net loss attributable to Tenneco widened to $839 million, or $10.34 per share in the first quarter ended March 31, from $117 million, or $1.44 per share, a year earlier.
On an adjusted basis, Tenneco lost 31 cents per share in the quarter.
Total net sales and operating revenues fell 14.5% to $3.84 billion.
Analysts on average expected Tenneco to post a quarterly loss of 90 cents on revenue $3.62 billion, according to IBES data from Refinitiv.
Up to Thursday's close, the company's shares fell about 65% this year.
(Reporting by Ankit Ajmera in Bengaluru; Editing by Ramakrishnan M.)
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