Our biggest region Europe is recovering sluggishly but is still on the lowest point of the century excluded 2009. To underline these trends, we can just take a look at the deliveries of weekend stay increased by 37% during the first half year 2010 whereas Western Europe actually decreased with 3%. At the same time, Latin America increased by close to 70% and represented 33%, one-third of all vehicle deliveries here in the first half year compared to 21% last year.With improving demand, the production has been increased gradually during 2010 and capacity utilization improved. Towards the end of the second quarter, we were back to pre-crises production levels in the second quarter 2009 if you remember marked the very bottom for us production-wise as we halted the production to clear out the stock of new vehicles. The operational leverage was impressive as we could combine a sharp increase of the volume with the cost reductions introduced during 2009. With the booming Brazilian market add strong Reals, we have a favorable currency situation despite drop of average rates in euro or and in pound sterling as well as US dollar since those have decreased to 10% whereas the Brazilian Reals has increased by 10%. And operating income for this Scania Group was $5.632 billion here in the first half year giving an operating margin of 15.2%. The cash flow in vehicles and service segments were strong the first half year and especially here in the second quarter. The cash flow was close to $6 billion whereof $3.6 billion is related to the second quarter. Deliveries of vehicles increased by 37% in the first half. And we were up to some 28,000 vehicles and the increase was more pronounced here in the second quarter wherein the increase was 75% compared to the very low second quarter 2009.
And we expect the third quarter now where delivery is close to record levels for the third quarter which happened in 2007, in 2008 and that will be also be closed to the deliveries we have had here in the second quarter 2010. And this is of course then provided a continued strong Brazilian market and provided that we do not have any other disturbances beyond our control.Due to the stronger demand, the four days week was abandoned in the very beginning in the second quarter here in the European production which led to higher capacity utilization and higher production rates. We have prepared ourselves for the coming levels, the coming quarter’s levels by among other things employing some 500 persons in the European production. Due to the uncertainty around the effects on demand of tightening fiscal balances in the aftermath of the sudden debt problems. These persons have been employed on temporary contracts. The volume of used trucks increased some 40% during the first half year compared to last year. On services we have experienced a continued improvement of the volume during the first half year but more pronounced here in the second quarter. Already in the beginning of the year, the service volumes on markets outside Europe showed strong increases whereas the service volumes here in Europe were performing more sluggishly. And here in Europe as you know we have the majority of our captive workshops and thereby also a major part of our service operation. The service volume improved in Europe during the second quarter, the volume increase in total globally was 10% but still with higher increases outside Europe than we saw in Europe, and as a consequence, the increase in parts volume is higher than increase of workshop hours. The increase in Europe is partly related to a higher transport demand but also to a need to maintain and repair the high volumes that we delivered out between the years 2006 and 2008. Read the rest of this transcript for free on seekingalpha.com