Sweden's Volvo Group, the world's second-largest truck maker by sales, posted deeper-than-expected second-quarter operating loss as the global crisis hits demand.

The Gothenburg-based company, which makes trucks, buses and construction equipment, posted a third consecutive quarterly loss on Tuesday as demand collapsed amid the financial crisis.

Volvo Group posted an operating loss of 6.9 billion kronor (€627 million, $885 million) for the three months ended June 3o, down from a profit of 7.2 billion kronor a year earlier.

The result was below analysts expectations – a survey by Reuters had forcast a loss of 4.7 billion kronor.

"The second quarter of 2009 remained difficult in terms of earnings in the wake of the exceptionally rapid decline in demand that followed the crisis in the financial system” said Leif Johansson, President and CEO, of Volvo. “Weak demand continued in essentially all of the Volvo Group’s markets”.

Net sales for the period fell 33 percent to 53.96 billion kronor while order bookings tumbled 51 percent in the quarter, with a fall of 59 percent in its key European market.

"In terms of market outlook, we maintain our assessment that the total European market for heavy trucks will be at least halved in 2009 compared with 2008 and that the North American market will decline by 30-40 percent," the company said.

The result is also hit by 3.2 billion kronor from increased provisions for credit losses amounting as well as write-downs on inventories, lay-off related costs and costs associated with an agreement with the unions regarding healthcare benefits for retirees, the company said.

The company's truck division includes several brands: Volvo Trucks, Renault Trucks, Nissan Diesel and Mack.

It is separate from Volvo Cars, which is owned by the US automaker Ford.

In morning trading on the Stockholm exchange, shares in Volvo Group were up 1.89 percent to 53.75 kronor in an overall market up by 3.74 percent.