Tenneco Inc. (NYSE: TEN) today announced revenue guidance for 2013 and 2014. The company’s revenue guidance is based on projected customer production schedules and industry forecasts.
For 2013, IHS Automotive forecasts that global OE light vehicle production will be up 3% in the regions where Tenneco operates. Full-year production is estimated to increase year-over-year in North America (up 3%), China (up 9%), South America (up 4%) and India (up 8%), while estimates show a 3% decline in European industry production. In 2013, according to Power Systems Research, class 4-8 on-road commercial vehicle production in Europe and North America is expected to be essentially flat year-over-year, and up 31% in South America. The company anticipates little industry volume recovery during the year in the commercial vehicle off-road market.
Full-year estimates indicate an overall improving production environment in 2013. However, as Tenneco indicated in its last earnings call, macroeconomic uncertainty remains relatively high and while good full-year revenue growth is expected, it will be weighted toward the second half of this year. Additionally, the current effective implementation date for China’s pending commercial vehicle emissions regulation is July 2013; however, there is a great deal of uncertainty around actual implementation. Consequently, Tenneco’s revenue estimates reflect a conservative estimate of growth in this market although it remains a very significant opportunity as installation rates increase in the future. With this level of overall global uncertainty, Tenneco is providing its revenue guidance as a range instead of a specific estimate.
In 2013, Tenneco expects its total OE revenue to be in the range of $6.4 billion to $6.8 billion including commercial vehicle revenue of $.9 billion to $1.1 billion. This growth will be driven by the company’s excellent position on light vehicle platforms globally and leveraging higher light vehicle volumes in North America, South America and China. Tenneco’s commercial vehicle business will have a relatively quiet year in launches with the main launches occurring later in the year in preparation for regulatory changes taking place in 2014. As a result, commercial vehicle revenue in 2013 will be primarily driven by the strength and timing of any industry volume recovery without any significant changes to customers, programs or content.