UPDATE 4-Goodyear profit tops forecast, shares jump

(Adds analyst's remarks, updates stock)

By David Bailey

DETROIT, Feb 14 (Reuters) - Goodyear Tire & Rubber Co (GT.N) posted better-than-expected fourth-quarter profit on Thursday as it benefited from higher pricing and a focus on more profitable branded tires, and its shares jumped as much as 9.6 percent.

The largest U.S. tire maker said revenue rose in each of its operating regions and it remains on track with a multiyear restructuring that includes asset sales, plant closings and production shifts to lower-cost regions.

"We see the company's performance in the quarter as evidence that its strategy is gaining traction, even after adjusting for the adverse impact of the (United Steelworkers union) strike in fourth quarter 2007," Calyon Securities analyst Mark Warnsman said.

Goodyear's ability to offset increasing raw materials prices was "particularly significant," Warnsman said in a note to clients.

Goodyear reported net income of $52 million, or 23 cents per share, compared with a net loss of $358 million, or $2.02 per share, a year earlier, when it faced a three-month strike in the United States.

Excluding discontinued operations and special items such as restructuring costs, losses on asset sales, financing fees and a lower tax expense, Goodyear said it earned 49 cents per share. Analysts' average forecast was 43 cents, according to Reuters Estimates.

Chief Executive Robert Keegan said Goodyear's focus on premium tires and reduction of debt and other obligations in recent years gave it confidence in dealing with the uncertain economic environment.

"Certainly, we are engaged in contingency planning relative to economic conditions," Keegan said on a conference call with analysts. "We are not overconfident, we are continuing to reduce our cost structure."

Revenue rose 11.3 percent to $5.16 billion. Analysts had expected $4.94 billion.

The company sold fewer tires overall due to weak winter demand in Europe and other key areas, and cutbacks in production of private-label tires in North America. However, price increases and the focus on more expensive branded tires led to a 10 percent increase in revenue per tire.

In North America, its largest unit, sales revenue rose 9.9 percent to $2.28 billion. Year-earlier results were hurt by the strike.

In the European Union, sales revenue rose 5.4 percent to $1.42 billion, supported by price increases, a focus on more expensive tires and favorable foreign exchange rates.

In its remaining regions -- covering Eastern Europe, Africa, the Middle East, Latin America, Asia and the Pacific -- revenue rose 20 percent to $1.46 billion.

JP Morgan analyst Himanshu Patel noted that Goodyear fared particularly well in tire pricing considering the rising cost of raw materials outside North America. Market expectations may have been lower than the consensus forecast, he added.