Sales in the Coating Effects business were CHF 940 million in the first six months, up 1% in Swiss francs and local currencies over the previous year. Growth in the segment was impacted by the slowdown of the automotive and construction industries in NAFTA, as well as an extensive program to prune products with low margins. Strong growth, however, was seen in the digital printing business. Segment volumes overall were 3% higher. Sales prices were 2% lower.
With business conditions in the second half of 2007 similar to those in the previous year, sales for the full year are expected to increase over 2006 levels in local currencies. Before restructuring charges, operating income margin is expected to increase by about 1%. This assumes that raw material costs will not continue to rise as they did in the first half. Net income in Swiss francs, as well as free cash flow, are both expected to be above 2006.