Despite a good top-line growth of six percent to 2.4 billion Swiss Francs headwinds in the form of soaring commodity prices and negative currency developments have affected our mid-year result. Both had a negative impact, resulting in an EBIT margin of 6.6 percent (previous year: 8.6 percent). Pricing and cost reduction measures have been put in place as counterbalance but with a delayed effect.
GF Piping Systems again shows a strong performance. The strategic acquisition Central Plastics is well on track. GF Automotive enjoys strong demand but is facing a steep increase in material costs. GF AgieCharmilles achieves strong growth in the milling machine business, but the weak US dollar affected margins considerably.
GF is well-positioned worldwide in its three core businesses, each enjoying a sustained demand despite some indications of a downward economic trend. Barring unforeseen circumstances, GF should continue on its growth path during the second half of 2008 albeit at a more moderate pace. The volatile currency and raw material situation will probably continue to put pressure on our margins.
