Tenneco Announces Q1 Results

30 April 1997

    GREENWICH, Conn., April 29 -- Tenneco today
reported that earnings per share from continuing operations rose 29 percent in
the first quarter, to 44 cents per share from 34 cents a year-ago.  Net income
from continuing operations rose 27 percent to $76 million, up from $60 million
a year ago.  Tenneco Automotive set first quarter records in revenues and
operating income.  Tenneco Packaging reported a decline in operating income
due largely to weaker containerboard prices.  This decline was partially
offset by higher earnings from the specialty products business and an
operating gain from the refinancing of two containerboard mill leases.
    The lease refinancing resulted in a one-time, pre-tax gain of $38 million.
The ongoing operating income benefit from this action is expected to be
approximately $15 million annually.  The cash flow improvement is projected to
be more than $120 million over the first two years and approximately $250
million over the next five years, due to lower lease costs and other benefits.
    All results are restated to reflect a restructured Tenneco formed in
December 1996 following the spin-off of Newport News Shipbuilding and the
merger of Tenneco Energy with El Paso Energy. *
    Quarterly operating income was $159 million, compared with $161 million
last year.  Revenues increased 6 percent in the quarter, to $1.6 billion from
$1.5 billion.  Income from discontinued operations in the year-ago quarter of
$435 million, or $2.55 per share, included a gain on the sale of the remaining
investment in Case Corporation, as well as net income from Newport News
Shipbuilding and Tenneco Energy.
    * Please Note:  For this reason, the more meaningful comparison for
purposes of analyzing quarter-to-quarter earnings is net income from
continuing operations.  (See footnote (a) on Page 3.)
    "We are pleased by the record results in our automotive parts business and
the continued solid performance of our specialty packaging operations in the
first quarter," said Dana G. Mead, Tenneco chairman and chief executive
officer.  "While the containerboard market remains disappointingly weak, we
continue to make steady progress in offsetting the cyclicality in that
business by growing our highly profitable specialty and protective packaging
operations.  At the same time, with our recently announced Automotive
reorganization, we are on target in our program to lower corporate overhead in
the range of $100 million by early 1998."
    Tenneco Automotive operating income rose 36 percent to $80 million from
$59 million a year ago.  Revenues increased 14 percent to $778 million from
$683 million in the first quarter last year, setting a quarter-over-quarter
record for the 14th straight time.
    Tenneco Packaging's operating income of $80 million, on sales of
$852 million, included the previously described lease refinancing.  In the
year ago quarter, operating income of $106 million was reported on sales of
$859 million.  Specialty packaging operating income was up 11 percent, led by
contributions from the foam products acquisition and stronger volume growth.
    "With the acquisition of the protective and flexible packaging operations
of KNP BT that we completed this week, we more than double Tenneco Packaging's
sales in Europe and we establish a significant presence in two additional
growth segments of the packaging business," Mead said.  "These operations,
with $540 million in 1996 annual sales, are an excellent strategic fit and
will immediately contribute to net income."
    For additional detail see Segment Analysis following the financial table.
    Tenneco is a $7 billion global manufacturing company headquartered in
Greenwich, Conn., with 50,000 employees worldwide.  Tenneco Automotive is one
of the world's largest producers and marketers of ride control products and
exhaust systems, which are sold under the Monroe(R) and Walker(R) brand names.
Among its products are Sensa-Trac(R) and Rancho(R) shock absorbers, Walker
Advantage(R) mufflers and DynoMax(R) performance mufflers, and Monroe
Clevite(TM) vibration control components.  Tenneco Packaging is among the
world's leading and most diversified packaging companies.  Among its products
are Hefty(R) trash bags, Hefty One Zip(R) and Baggies(R) food storage bags, E-
Z Foil(R) single-use aluminum cookware and Diamond(R) tableware.



                    TENNECO CONSOLIDATED EARNINGS RESULTS
                                  Unaudited

                                FIRST QUARTER

                                          1997               1996
    Net sales and operating
    revenues :
    Automotive                         $778,000,000     $683,000,000
    Packaging                           852,000,000      859,000,000
    Other                                (1,000,000)      (3,000,000)
                                     $1,629,000,000   $1,539,000,000

    Operating income (loss):
    Automotive                          $80,000,000      $59,000,000
    Packaging                            80,000,000      106,000,000

    Other                                (1,000,000)      (4,000,000)

                                        159,000,000      161,000,000
    Less :
    Interest expense (net of
     interest capitalized)               45,000,000       47,000,000
    Income tax expense                   33,000,000       49,000,000

    Minority interest                     5,000,000        5,000,000

    Income from
     continuing operations               76,000,000       60,000,000
    Income from discontinued
     operations (a)                           --         435,000,000
    Net income                           76,000,000      495,000,000

    Preferred stock dividends                 --           3,000,000

    Net income to common stock          $76,000,000     $492,000,000

    Average common shares outstanding   171,300,000      170,400,000

    Earnings per average common share:
    Continuing operations                      $.44             $.34
    Discontinued operations (a)               --                2.55
                                               $.44            $2.89

    (a)  Includes the discontinued operations of the energy business
($77 million or $.45 per share); the shipbuilding business ($19 million or
$.11 per share) and the gain from the sale of the remaining stock of
Case Corporation, along with equity in Case's loss through the sale date
($339 million or $1.99 per share).

    Segment Analysis & Corporate Initiatives Automotive
    Tenneco Automotive reported an all-time record first quarter for both
revenues and operating income.  Operating income rose 36 percent to
$80 million from $59 million last year.  Revenues increased 14 percent to
$778 million from $683 million in the first quarter last year, setting a
quarter-over-quarter record for the 14th straight time.  Overall operating
margins improved by 20 percent.  Strong new original equipment business in
North America and Europe, higher margins from strategic acquisitions,
worldwide aftermarket price increases and aggressive cost reductions were
largely responsible for these improved results.
    Revenues for the North American original equipment business rose
38 percent over the first quarter of 1996, driven by the Clevite acquisition
and brisk sales of popular light trucks and sport-utility vehicles featuring
Tenneco Automotive ride control and exhaust products.  Despite a stronger
dollar, the company's original equipment revenues in Europe increased
5 percent over the same period last year, boosted by new business from
recently launched Mercedes, Porsche and Volkswagen vehicles.
    Overall revenues in the North American aftermarket rose 2 percent compared
with the first quarter of last year, while aftermarket revenues were flat in
Europe.  Tenneco Automotive's South American operations, both original
equipment and aftermarket, recorded a 111 percent improvement in revenues over
the first quarter of 1996 due to new business from the acquisitions of Fric-
Rot and Minuzzi and an improved sales mix of premium products.
    Several new vehicles carrying Tenneco Automotive ride control or exhaust
system components were either launched or reached full production in the first
quarter, including the Ford Expedition, the redesigned Chevrolet
Malibu/Oldsmobile Cutlass, Buick Park Avenue, Mercedes E-Class series and
Porsche 986 Boxster.  In Europe, the recently launched Audi A3 and Skoda
Octavia feature both Tenneco Automotive ride control and exhaust products.
    "Automotive earnings, already record setting, should gain additional
momentum as we enter our traditionally strong season and begin to see the
added benefits of newly implemented cost reduction efforts," Mead said.

    Packaging
    Tenneco Packaging reported operating income of $80 million, including the
$38 million gain on lease refinancing, on sales of $852 million in the first
quarter.  In the year ago quarter, earnings of $106 million were reported on
sales of $859 million.  The earnings decline was partially offset by improved
earnings in the specialty products business and lease refinancing.
    In the first quarter, Tenneco Packaging refinanced leases on its Tomahawk
and Valdosta containerboard mills, realizing an operating income benefit of
$38 million in the quarter.  Going forward, reduced lease expenses are
projected to improve operating income by approximately $15 million annually.
The cash flow improvement is expected to be more than $120 million over the
first two years and approximately $250 million over the next five years, due
to lower lease costs and other benefits.
    In Specialty Packaging, first quarter operating income rose to $48 million
compared with $43 million in the year-ago period.  Operating earnings were led
by contributions from the Amoco foam acquisition offset partially by pricing
pressures in stretch film.  Revenues climbed 22 percent to $483 million from
$398 million in the first quarter of 1996.  Consumer sales growth showed
particular strength, rising 9 percent, led by a better than 50 percent volume
increase in Hefty One Zip(R) sales over last year.
    Paperboard Packaging operations, which include containerboard mills,
corrugated products and folding carton, continued to experience weak
performance.  Operating earnings declined due largely to weaker containerboard
prices, with industry linerboard price declines of 27 percent and medium
prices down 38 percent compared with the same period last year.  Linerboard
prices are the lowest since 1993, the last cyclical trough, while medium
prices are the lowest since 1982.
    Operating income for the quarter was $32 million, including the gain on
lease refinancing, down from $63 million in the year-ago period.  Revenues
were $369 million compared with $461 million in the first quarter of 1996.
Despite weak containerboard prices, operating income from corrugated
converting operations rose 7 percent over the fourth quarter of 1996, driven
by continued growth in graphics, specialty corrugated products and value-added
services.
    Containerboard mill cost reductions and productivity improvements continue
to be a primary focus, with a two-year target of $75 million in cost
reductions.  More than half is expected to be realized in 1997.  On an annual
basis these improvements will reduce containerboard costs by more than $30 per
ton.



    "While we are not satisfied with containerboard results in the quarter, we
have fared better than most of our competitors, and we are well positioned for
any upturn in pricing," Mead said.  "At the same time, the outlook for
specialty packaging is highly encouraging.  We continue to introduce products
for the faster growing markets, such as convenience food and agricultural
packaging, which should continue to boost sales and improve our operating
margins."

    Corporate Cost-Reduction Initiatives
    Tenneco's new structure has enabled it to launch a broad initiative to
improve customer focus, enhance global competitiveness and reduce overhead
costs.  The corporate effort is expected to yield approximately $100 million
in cost reductions by early 1998.  As a first step in this initiative, Tenneco
Automotive in March announced a new management structure expected to
contribute at least $30 million in savings.  This action is in addition to the
European exhaust system manufacturing restructuring and realignment of the
North American aftermarket ride control product lines announced in the fourth
quarter of 1996, which are projected to save $28 million annually.
    The corporation's continuing program to improve processes in all business
activities, known as Cost of Quality, reduced failure costs by $34 million in
the quarter, adding $22 million to operating income.  Failure costs are costs
associated with inefficient manufacturing and administrative processes,
malfunctioning equipment, related downtime and other factors.
    During 1997, Tenneco plans to further reduce working capital on a
percentage of revenues basis, generating the equivalent of an additional
$230 million in cash flow.  The company's three-year working capital
initiative begun in early 1996 has already reduced working capital on a
percentage-of-revenues basis by 4.5 percentage points, which is equivalent to
a $280 million increase in cash flow.  Operating division Economic Value Added
improved by $33 million over the previous quarter.

    Other Recent Company Actions
    --  Tenneco this week completed its acquisition of the protective and
flexible packaging operations of NV Koninklijke KNP BT, a Dutch distribution,
paper and packaging firm, for approximately $375 million.  Tenneco's new
European protective packaging operations are located in the Netherlands,
Belgium, Germany, France, Great Britain, Italy and Poland.  The Astro-Valcour
subsidiary has nine locations in the United States and Canada, while there are
four flexible packaging locations in Germany and one in Egypt.  Combined with
Tenneco's highly successful Hexacomb operations, this purchase secures Tenneco
Packaging a leadership position in the higher margin protective packaging
market, a base for additional international growth and the capability to
provide additional packaging solutions for customers.
    --  The company also announced in March that the Tenneco Automotive global
alliance with ITT Automotive to develop and produce modular chassis systems is
teaming with Benteler Automotive, one of the world's largest producers of
chassis systems and components, to enhance its relationships with vehicle
manufacturers on a worldwide basis.  The alliance will offer automakers
significant added value in shorter development time and optimized performance.
    --  Also in the quarter, Tenneco announced a new stock repurchase program
that will allow the company to buy up to 5 percent or nearly 8.6 million of
its outstanding shares.  As of March 31, the stock buyback was approximately
20 percent complete.

    For more information about Tenneco, visit the Tenneco website at
 http://www.tenneco.com.
    Several statements in this press release are forward looking and are
identified by the use of the following forward-looking words and phrases:  "is
expected," "plans to," "earnings should gain_," "on target to," "are designed
to," "going forward," "is projected to,"  and "are projected."  These forward-
looking statements are based on the company's current expectations.  Because
forward-looking statements involve risks and uncertainties, the company's
actual results could differ materially.  Among the factors that could cause
results to differ materially from current expectations are:  (i) the general
political, economic and competitive conditions in markets and countries where
the company and its subsidiaries operate; (ii) changes in capital availability
or costs; (iii) decreases in demand for company products and the resulting
negative impact on the company's revenues and margins from such products;
(iv) the cost of compliance with changes in regulations, including
environmental regulations; (v) employee workforce factors; (vi) increases in
the costs of the company's raw materials; (vii) the company's ability to
integrate the operations of acquired businesses quickly and in a cost-
effective manner; and (viii) the timing and occurrence (or non-occurrence) of
transactions and events, which may be subject to circumstances beyond the
company's control.

SOURCE  Tenneco