) recently announced its plans to close its emission control plant
in Vittaryd, Sweden, as soft market conditions in Europe is hurting
its aftermarket emission control business.
The company plans to shut down the plant, which employs around 113
hourly workers and 9 salaried workers, by the third quarter of
2013. Though Tenneco has shown concern about the employees, the
economic slump in the region has forced the company to consolidate
its aftermarket emission control capacity in Europe.
The company expects to shift production from Vittyard to other
emission control operations located in Laval in France, Edenkoben
in Germany, Valencia in Spain and Rybnik in Poland. This strategy
will help the company meet the market demand and strengthen its
The closure will result in restructuring charges of $10 million to
$14 million, including non-cash asset impairments, cost of
relocating tooling, equipment and production to other facilities,
severance and retention payments to employees, and other related
costs over the next four quarters.
The company will incur about $4 million in non-cash charges in
the third quarter of 2012. Meanwhile, it expects to generate
savings of $4 million in late 2013 after the charges are paid off.
MERITOR INC (MTOR): Free Stock Analysis Report
TENNECO INC (TEN): Free Stock Analysis Report
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Tenneco, in the second quarter of 2012, registered a 40% increase
in profit (excluding special items) to $70 million or $1.14 per
share from $50 million or 81 cents in the comparable quarter last
year. The results also breezed past the Zacks Consensus Estimate by
Total revenue increased marginally to $1.92 billion, but failed to
match the Zacks Consensus Estimate of $2.04 billion. The
year-over-year growth was attributable to a rise in production of
light vehicles in North America and China along with higher
commercial vehicle revenues around the world.
Tenneco, the leading maker of emission control and ride control
systems benefits from tighter emission regulations and rising
commercial vehicle business. However, the company remains exposed
to customer concentration risks.
Tenneco, which competes with
), maintains a Zacks #3 Rank, which translates into a short-term (1
to 3 months) Hold rating. Currently, we have a long-term Neutral
recommendation on the stock.