Dow Jones Newswires | Moody’s Investors Service upgraded Tenneco Inc. a notch thanks to
improving trends in the automobile sectors of North America and Europe.
The company, which makes various auto parts, last year was perched on
the edge of bankruptcy as tumult in the auto industry pushed it into the
red and constrained sales. Investor unease pressured its share price
below 70 cents, but it has since rebounded as Tenneco has posted three
straight quarters in the black.
Tuesday, Moody’s said the company’s performance trajectory will only be enhanced by trends in the European and North American auto markets.
The agency said it now expects that automobile registrations in Europe this year won’t lag the global recovery as dramatically as previously anticipated, which will benefit output.
While North American operations of the Big Three auto makers of Detroit account for about 21 percent of the company’s revenues, Moody’s said Ford Motor Co.’s and General Motors Co.’s improving profitability, as well as the stabilizing market share for GM’s remaining product lines, are lowering the riskiness of Tenneco’s U.S. auto-market exposure.
In addition, Tenneco will benefit from its lower cost structure as the auto industry recovers. New emissions regulations will also support its ratings into 2011, according to the Moody’s.
It raised Tenneco one notch to B2, still five levels below investment grade. The outlook was revised to stable from positive.
Tenneco shares were flat in after-hours trading, after closing up 1.8 percent at $21.53. The stock has more than tripled in value in the last year.