Basic conditions for improvement are there... but there is uncertainty that makes customers put off the decision to buy

Leif Johansson Volvo chief executive

Apart from the one-off restructuring costs totalling 3.9bn kronor (�260m; $431m) as the group shed 5,700 staff, the US and global economic downturn also gave Volvo a knock.

"We have had the very bad impact of the North American downturn, perhaps the worst in the last couple of decades," chief executive Leif Johansson told the BBC's World Business Report.

The world's second biggest truck-maker forecast weak markets would continue this year after orders fell 4% in Europe and 35% in North America in 2001.

The 1.9bn kronor pre-tax loss was larger than analysts had expected and compared with a profit of 6.2bn in 2000.

US economy 'flat'

"Basic conditions for improvement are there... but there is uncertainty that makes customers put off the decision to buy," said Mr Johansson.

"I think we must conclude that we do not see any sign of improvement in North America, we see a slight decline in the third quarter of this year and the best way to call the US market is flat," he said.

Johansson downbeat on economic outlook

Group sales rose 50% to 180.6bn kronor, reflecting Volvo's acquisition Renault and Mack, but when adjusted for acquisitions and currency effects, sales dropped 5%.

Volvo shares rose 6.5% on the strength of the truck sales figures, which suggested it was riding out an industry downturn.

Volvo gave no details about the disposal of its 45.5% stake in domestic rival Scania, which was left over from a merger attempt vetoed by EU competition authorities.

The EU has told Volvo to sell the Scania stake by January 2004.

It sold the car division to US carmaker Ford in 1999.