STOCKHOLM (AFP) -- Swedish truck maker Volvo Group on Friday reported a net loss in the fourth quarter in the face of crumbling demand, which it said would remain weak through the first half of 2009.

But company shares shot up by 16 percent as the performance was seen as less damaging than had been feared and the group's solid financial position provided welcome news.
Volvo recorded a net loss of 1.348 billion kronor (128 million euros, 163 million dollars) in the final three months of 2008 against net profit in fourth quarter 2007 of 4.0 billion kronor.
Fourth quarter sales fell 9.0 percent to 76.95 billion kronor. For the full year 2008 Volvo suffered a 33 percent plunge in net earnings to 10.01 billion kronor from sales that rose 6.0 percent to 303.66 billion kronor.
The company predicted a further erosion in the market in 2009. Like its Swedish rival Scania, Volvo has been hard hit by the economic slowdown as customers increasingly cancel orders.
“We do not see a return of demand during the first half,” Volvo chief executive Leif Johansson said in a statement.
Demand in Europe, North America and Japan in particular would remain sluggish in the first six months of the year, the company said, forecasting a 30 to 40 percent decline in the European heavy truck market.
In Japan, the market for medium-duty and heavy-duty trucks was expected to decline by 10 to 15 percent from the level of 74,500 vehicles in 2008.
Volvo's main division, Volvo Trucks, which manufactures lorries under the brands Volvo, Renault and Mack, delivered 251,150 vehicles last year, up 6.0 percent over 2007. But deliveries fell 22 percent in the fourth quarter.
Orders plunged by 47 percent in the full-year and by a whopping 82 percent in the last three months of the year.