STOCKHOLM (Reuters) -Swedish truckmaker AB Volvo reported on Wednesday a larger drop than expected in fourth-quarter operating profit but raised its dividend payout.

Operating profit was 14.04 billion crowns ($1.28 billion) against a year-earlier 16.98 billion and a mean forecast in an LSEG poll of analysts of 14.51 billion, on a sales drop of 6%.

Volvo proposed an ordinary dividend for 2024 of 8.00 crowns per share, up from 7.50 crowns for 2023, and an unchanged extra dividend of 10.50 crowns.

"In Q4, the European truck market continued to decline compared with the high levels of 2023 with freight volumes and freight rates having come down from previous peaks," CEO Martin Lundstedt said in a statement.

He said the North American market for vocational trucks remained strong in the quarter, and had bottomed out for the long haul segment.

Volvo repeated a 2025 market forecast from October for 290,000 heavy trucks sold in Europe, and 300,000 in North America.

($1 = 10.9777 Swedish crowns)