DETROIT—Tenneco Inc. expects to grow at rates outpacing the industry for the next three year, based on steadily increasing light vehicle production and a rebound in commercial and off-highway vehicle output.
Tenneco recently disclosed its growth forecasts—revenue growth of 5 percent in 2016, 6 to 8 percent in 2017 and 7 to 9 percent in 2018—along with its fiscal 2015 earnings results. These projections are all above the aggregate industry production expectations of 2, 3 and 4 percent for the same years, Tenneco said.
Tenneco Chairman and CEO Gregg Sherrill said the firm's revenue growth estimates are based on a number of factors, including:
- Incremental light vehicle clean air revenue from product launches in 2015 and 2016;
- Incremental revenue from Monroe Intelligent Suspension programs—with four new launches in 2016 and the continued ramp-up of programs the firm launched in 2015; and
- Commercial truck and off-highway emissions regulations, with additional content on off-highway Tier 4f and Stage 4 programs in North America and Europe, incremental revenue from 2015 launches of a North America medium-duty commercial truck and an off-highway program in Japan, increasing market share with com- mercial truck customers in China, and initial launches with commercial truck customers in India to comply with BS IV regulations.
In calculating its estimates, Tenneco cited IHS Automotive's December 2015 light vehicle production forecast in the regions where Tenneco operates; Power Systems Research (PSR) January 2016 forecast for global commercial truck and buses; PSR off-highway engine production in North America and Europe; and Tenneco estimates.
Tenneco's revenue growth estimate for 2016 assumes a 3-percent rise in production in industries Tenneco serves globally, based on the company's following assumptions:
c Further weakening in off-highway industry volumes;
c Continued weak commercial truck production in China and Brazil; and
c China commercial truck after-treatment installation rates similar to 2015.
For fiscal 2015 Tenneco reported record operating income of $519 million on 5-percent higher sales of $8.2 billion. Tenneco attributed its improvements to 6-percent growth in light vehicle OE business, which offset a 3-percent drop in commercial vehicle-related business.
Tenneco designs, manufactures and markets clean air and ride performance products and systems for automotive and commercial vehicle OEMs and the aftermarket.