Dec. 11 (Bloomberg) -- ArvinMeritor Inc., a U.S. maker of shock absorbers and brakes for commercial trucks, jumped 8.9 percent after the company affirmed its 2008 profit forecast.

ArvinMeritor will have earnings of $1.40 to $1.60 a share and generate free cash flow, according to a presentation to analysts today. That compared with the $1.32 average of 10 analyst estimates compiled by Bloomberg.

A fiscal 2008 profit would be ArvinMeritor's first after two straight annual losses totaling $394 million. The forecast matched the outlook the Troy, Michigan-based company gave on Nov. 14 even though a weakening U.S. economy is damping heavy- truck demand in North America.

ArvinMeritor's expectations for better operating earnings depend on ``truck demand stabilizing and fixing some operational problems,'' said Shelly Lombard, a high-yield debt analyst for Gimme Credit Publications in Montclair, New Jersey. ``If Arvin is affirming guidance, maybe those things are happening. But I think it's too early to bet on that.''

ArvinMeritor gained $1 to $12.25 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have fallen 33 percent this year.

Revolving Loan

The company also said it renegotiated a revolving loan agreement, lowering available borrowing to $700 million from $900 million and adjusting the terms to provide more liquidity ``under a variety of business conditions.''

The previous accord ``impaired availability'' at the end of each quarter, ArvinMeritor said.

Separately, ArvinMeritor agreed to acquire Mascot Truck Parts Ltd. for an undisclosed sum. Mississauga, Ontario-based Mascot remanufactures transmissions and other commercial-truck parts. Closely held Mascot has 170 employees in six locations in Canada.

The acquisition will help ArvinMeritor expand its replacement-parts business. Mascot is a ``strategic'' purchase allowing ArvinMeritor to grow without adding a large amount of debt, Chief Executive Officer Charles ``Chip'' McClure said on a conference call with analysts.

McClure also said ArvinMeritor has improved its manufacturing capabilities in Europe, where it hasn't been able to meet demand in a strong commercial-truck market.

ArvinMeritor is seeking to reduce expenses by cutting 2,800 jobs and closing or consolidating 13 plants in Europe and North America. The company said it expects to meet its target for $75 million in annual savings in 2008 and $150 million in 2009.

McClure said ArvinMeritor's expense cuts include a new policy for all employees, including him, to fly coach class on business trips.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6bloomberg.net

Last Updated: December 11, 2007 16:27 EST