Tenneco Business report FY2009

Business Highlights

Financial Overview

(in million dollars)
  FY2009 FY2008 Rate of change(%) Factors
Sales 4,649 5,916 (21.4) 1)
EBIT 92 (3) -


North America
-Revenues from the North American operations decreased $538 million for 2009 compared to 2008. Lower sales from both North American OE business units were partially offset by higher aftermarket revenues.

-North American OE emission control revenues were down $437 million for 2009; excluding substrate sales and currency, revenues were down $192 million compared to 2008. This decrease was mainly due to lower OE production volumes year-over-year and a decrease in steel recovery due to lower steel costs.

-North American OE ride control revenues for 2009 were down $107 million from the prior year, excluding $4 million of unfavorable currency. The decline was mainly driven by lower OE production volumes. Its total North American OE revenues, excluding substrate sales and currency, decreased 23% for 2009 compared to 2008.

Europe, South America and India
-The European, South American and Indian segment's revenues decreased $711 million, or 26%, in 2009 compared to 2008.

-Excluding $178 of unfavorable currency and substrate sales, European OE emission control revenues decreased 17% from 2008 due to lower OE production volumes and decreased year-over-year alloy surcharge recovery due to lower alloy surcharge costs.

-Europe OE ride control revenues of $421 million in 2009 were down 12% year-over-year. Excluding unfavorable currency, the revenues decreased by 7% for 2009 due to lower production volumes, partially offset by new ride control launches, including new CES business, and a favorable vehicle mix weighted toward the A/B segment vehicles, which have been better seller under the recent government incentive programs.

-The total European OE revenues, excluding substrate sales and currency, decreased 13% in 2009 compared to 2008.

Asia Pacific
-Revenues from its Asia Pacific segment, which includes Australia and Asia, decreased $18 million to $510 million in 2009 compared to last year. Excluding the impact of substrate sales and currency, revenues increased $26 million from $403 million in the prior year. Asian revenues for 2009 were $380 million, up 11% from last year. Higher OE production volumes in China were the primary reason for the increase. Excluding substrate sales and currency, Asian revenue increased $57 million when compared with last year. Full year 2009 revenue for Australia decreased 30% to $130 million. Excluding substrate sales and $20 million of unfavorable currency, Australian revenue decreased 18% due to industry light vehicle production declines.


-Top 10 Light vehicle platforms as a percent of Total 2009 Revenue
Platform %of total 2009 revenue Products
Ford P131 5% -Emission Control
-Ride Control
GM Epsilon/Epsilon 2 4% -Emission Control
-Ride Control
GMT900 4% -Emission Control
-Ride Control
Ford T1 3% -Emission Control
VW PQ35 3% -Emission Control
-Ride Control
Ford C1 3% -Emission Control
-Ride Control
BMW L2 3% -Emission Control
Toyota F1 2% -Emission Control
Ford CD 1% -Emission Control
-Ride Control
GM Lambda 1% -Emission Control

According to the company's presentation documents issued in February 2010, the company wins and launches "Computerized Electronic Suspension" business as follows
-Volvo V70, XC70, S80, XC60
-Audi A6, Allroad
-Ford S-Max, Galaxy, Mondeo
-Mercedes C-Class and E Class
-VW Passat, Golf and additional European platforms with three more customers

-In Nov. 2009, the Company announced that it is supplying a diesel aftertreatment system for the 2011 Ford F-Series Super Duty truck. This diesel aftertreatment system includes a diesel oxidation catalyst, diesel particulate filter and selective catalytic reduction (SCR) catalyst. In addition, the Company is supplying its Multi-Tuned Valving system in all shocks for the Super Duty. Multi-Tuned Valving enhances the ride while reducing noise and improving durability. The Company is also supplying "Clevite" Elastomer suspension isolators. The elastomer suspension isolators are tuned specifically for the Super Duty to minimize noise, with increased durability. (From a press release on November 30, 2009)

Joint Ventures

-In June 2009, the Company announced that it has formed a new joint venture (JV) with Beijing Hainachuan Automotive Parts Company Limited (BHAP) to produce vehicle emission control exhaust systems for the China market. Initially, the new JV will supply emission control systems for Beijing Hyundai starting in 2010. Tenneco will serve as the majority owner with a 51% equity stake and BHAP will own the remaining 49%. Tenneco also announced that it intends to establish an emission control manufacturing presence later this year in Guangzhou to support new business with Nissan. In China, Tenneco's OE customers include Volkswagen, General Motors, Ford, BMW, Brilliance, Chery, PSA, Daimler Chrysler, Suzuki, Nissan, Audi and Hyundai. (From a press release on Jun 5)


-The Company will close its original equipment (OE) ride control plant in Cozad, Nebraska, USA. The company is due to transfer current operations at the site to other locations, including Hartwell, Georgia and Paragould, Arkansas, as well as to Celaya, Mexico. Tenneco expects to complete the closure in the fourth quarter 2010. (From a press release on September 22, 2009)


-The Company estimates that its global original equipment revenues will be approximately $4.4 billion in 2010 and $5.7 billion in 2011. Adjusted for substrate sales, the company’s global original equipment revenues are estimated to be approximately $3.2 billion in 2010 and $4.0 billion in 2011. Its estimates are based on 2010 light vehicle production forecasts of 10.6 million units in North America, 17.6 million units in Europe and 13.4 million units in China. In 2011, light vehicle production is forecasted to be 12.3 million in North America, 18.3 million in Europe and 14.8 million in China.

-In addition, the Company projects to achieve a five year average compounded annual OE revenue growth rate of 18% to 20% through 2014. The growth is primarily driven by increasingly stringent and broader emissions regulations that are being implemented globally, which will accelerate growth in the on-road commercial vehicle makers.

-Between fourth quarter 2009 and fourth quarter 2011, the Company is launching multiple programs with eleven different commercial vehicle customers, both truck and engine manufacturers, to help customers meet new emission regulations for on and off-road commercial vehicles. The Company began launching some of these programs in China at the end of 2009 with China National Heavy Truck Company, Shanghai Diesel Engine Company and Weichai Power. Programs in North America, Europe and South America primarily begin launching in the second half of 2010. Its commercial vehicle emission control customers also include Caterpillar, Navistar and Deuz as well as five customers who will be announced as program launch. The Company will also supply diesel aftertreatment systems, including selective catalytic reduction, for next generation heavy-duty pick-up trucks in North America. Based on current light and commercial vehicle production forecasts, the Company projects that 15% of its global OE revenues for 2011 and between 25% and 30% of its global OE revenues for 2012 will be generated by commercial vehicle business. 


R&D Expenditure

(in million dollars)
  FY2009 FY2008 FY2007
Total 97 127 114

R&D Structure

-In May 2007, the Company opened its first research and development center in China. This engineering center -- a joint venture between Shanghai Tractor and Engine Company (STEC), a subsidiary of Shanghai Automotive Industry Corp. (SAIC) -- will focus on emission control product design and development for its growing OE and aftermarket businesses in China and the Asia-Pacific region.

Technological Alliance

-In February 2009, the Company signed a joint agreement with GE Transportation to develop a proprietary SCR and aftertreatment technology designed to reduce and control diesel engine emissions for various transportation and other applications. The Company will collaborate with GE Transportation on the development and production of GE's Hydrocarbon-Selective Catalytic Reduction catalyst technology (HC-SCR), a diesel aftertreatment innovation aimed at reducing NOx emissions as effectively as urea-based SCR systems. Additionally, the Company will work with GE Transportation to further develop and integrate the HC-SCR technology into complete aftertreatment systems for both locomotive and off-highway vehicle markets. Once fully developed, this technology will also be offered to customers in the on-road, marine and stationary power markets.

-In 2009, the Company signed exclusive licensing agreements for T.R.U.E. Clean, an exhaust aftertreatment technology used for automatic and active regeneration of Diesel Particulate Filter (DPFs), with Woodward Governor Company and for vaporizer technologies with another company. These technologies, which complement its array of existing emissions control products, allow the Company to provide integrated exhaust aftertreatment systems to commercial vehicle manufactures and others.

Product Developments

Emission Control Product Plan
2009: Turnkey SCR System, Urea Injection and dosing Module, Retrofit locomotive aftertreatment

2010: Off-road diesel oxidation catalyst & DPF, Off-road emissions module

2011: Fuel vaporizer, Hydrocarbon injector, Aftertreatment ECU, Electronic exhaust valve

2012: Next generation manifold, Hydrocarbon SCR, Low backpressure valve muffler, Solid urea SCR

2013: Woven metal DPF, Integrated Manifold/Turbocharger housing, Stationary engine aftertreatment

2014: Multiwrap converter, Gasoline particulate filter

-In October 2009, the Company announced that it has been awarded a 24 million USD loan as part of the U.S. Department of Energy (DOE)'s Advanced Technology Vehicles Manufacturing (ATVM) Incentive Program. The funding will be applied to the development and production of emission control products designed to achieve environmental and fuel efficiency objectives, including catalytic converters, diesel oxidation catalysts, diesel particulate filters and selective catalytic reduction (SCR) units. The systems will be developed at the company's facility in Grass Lake, Michigan, and manufactured at its facilities in Ligonier, Indiana, Litchfield and Marshall, Michigan, and Seward, Nebraska for use in vehicles as early as model year 2010. Tenneco is the first automotive parts supplier to receive federal loans from the ATVM incentive program. To date, four vehicle manufacturers have also been awarded loans under the 25 billion USD ATVM program. (From a press release on Oct. 27, 2009)

Investment Activities

Capital Expenditure

(in million dollars)
  FY2009 FY2008 FY2007

North America

45 108 106
Europe, South America and India 58 89 74
Asia Pacific 15 24 18


118 221 198