STOCKHOLM (AP) -- Swedish truck maker AB Volvo said Friday it swung to a loss in the fourth quarter, hurt by a steep fall in demand, the costs of production cutbacks and more expensive raw materials.
The Goteborg-based company posted a net loss of 1.4 billion kronor ($120 million) in the quarter, compared with a profit of 4.1 billion kronor in the same three months a year earlier.
The company said the truck market in its main markets -- Europe, North America and Japan -- stayed weak, with a lower amount of orders.
That led to a drop in fourth-quarter sales, to around 77 billion kronor from 84.6 billion kronor in the same quarter in 2007.
The company said that although its decision to reduce inventories by slashing production helps boost its cash flow, the measure takes time to affect costs.
"We will also see the effects of this during the first half of 2009," Chief Executive Leif Johansson said in a statement, noting his company does not expect a recovery in truck market demand during this time.
"The Volvo Group's truck operations are in the process of adapting the industrial system to meet a significant market decline in Europe the first half of 2009," the company warned, adding its outlook for the European heavy-duty truck market is forecast at between 180,000-299,000 vehicles for the full year.
During the second half of last year, the company announced a number of layoffs, affecting staff worldwide in 2008 and 2009.
By the end of this year, the company will have cut its work force of nearly 100,000 by more than 16,000 employees, with the majority of layoffs in Sweden.
Goteborg-based Volvo, which sold its car division to Ford Motor Co. in 1999, also makes buses, engines and construction equipment. It also owns Renault Trucks, Mack Trucks and Nissan Diesel.