Although the company is increasing production and backed its forecast for a rise in global shipments, margins in the quarter will take a hit from increased manufacturing and transportation costs in North America and higher interest rates in Australia.
The Perrysburg, Ohio-based company now expects its second quarter adjusted profit to be slightly lower and margins to fall 3-6 percentage points compared with the year-ago quarter. It had earlier expected earnings to be flat.
Stronger currencies in Australia and New Zealand have also hurt exports of bottles used for wine and beer -- two of the company's key end markets.
"Our wine and beer customers in Australia and New Zealand are facing unprecedented challenges," Chief Financial Officer Ed White said at an industry conference.
White expects the problems to persist beyond the second quarter, prompting the company to temporarily cut production in the region, which accounts for about 10 percent of its total revenue.
It, however, reaffirmed that global shipment levels will rise 5-10 percent in the second quarter.
Other than beer and wine bottles, Owens-Illinois also makes containers for food items, juice, pharmaceuticals and soft drinks.
A sluggish beer market and production inefficiencies are also hurting its North American operations.
But as demand for the wine, spirits and food segments held up in the quarter, the company restarted two idled furnaces. (Reuters)
