Goodyear profit tops estimates; shares surge

By Deepa Seetharaman (Reuters) - Goodyear Tire & Rubber Co , one of the world's largest tire companies, posted a higher-than-expected fourth-quarter profit on Thursday and said it had fully funded its hourly U.S. pension plan, sending its shares up as much as 7.6 percent. The profit beat came even as revenue slumped 5 percent and missed Wall Street expectations. Goodyear also confirmed its outlook for 2014 through 2016. Goodyear funded its U.S. plan with $1.15 billion (690.98 million pounds) in cash. The company added that it had started to freeze its pension plan and adopt a more conservative investment strategy. "The bigger story is that strong Q4 cash flow allowed Goodyear to fully fund the hourly pension entirely with cash, with no mix of debt as was widely expected," Citi analyst Itay Michaeli said in a research note. Goodyear shares were up 6.7 percent at $25.80 in morning trading after rising as high as $25.995 earlier in the session. Thursday marked the largest one-day change for the stock since July 30, when it rose almost 9 percent. The company posted net income available to common shareholders of $228 million, or 84 cents per share, for the fourth quarter, up from breakeven a year ago. Excluding one-time items, the profit was 74 cents per share. The analysts' average estimate was about 62 cents, according to Thomson Reuters I/B/E/S. Revenue fell 5 percent to $4.79 billion and missed analysts' expectations of $4.95 billion, hurt by lower third-party chemical sales in North America and a $102 million hit in unfavourable foreign currency translations. (Reporting by Deepa Seetharaman in Detroit; Editing by Jeffrey Benkoe and Lisa Von Ahn)