Citing higher costs, Owens-Illinois (OI) slashed its second-quarter earnings forecast on Wednesday, knocking shares of the glass container maker about 7% lower.

The Perrysburg, Ohio-based company warned it now sees non-GAAP EPS shrinking in the second quarter from the year-earlier 90 cents and GAAP EPS is expected to be flat.

Analysts had been forecasting EPS of 85 cents on sales of $1.89 billion.

Owens-Illinois blamed the downgraded outlook on higher manufacturing costs and challenging market conditions in Asia/Pacific, especially in Australia and New Zealand. Second-quarter operating margins are expected to decline by 3 to 6 percentage points.

Shareholders expressed their displeasure, sending the company's stock dropping 8.7% to $26.97 Wednesday morning and leaving it off nearly 4% on the year. 

Despite the troubles, Owens-Illinois also said it expects its second-quarter global shipment levels to increase 5% to 10% and free cash flow of about $300 million.

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