The US company is investigating accounting errors in its additives business

Shares in additive and compounds major Ferro fell by more than one fifth on news that the group has instigated an investigation into “inappropriate accounting entries” in its Polymer Additives business.

The Cleveland-based group, which has manufacturing plants in south Wales, Belgium and Portugal, blamed problems in the additives division for earnings per share of just one third of Wall Street expectations.

The company said that second quarter results earnings per share are likely to come out between $0.10 and $0.12 a share compared with analyst predictions in the $0.34 to $0.35 range. The $1.6bn (E1.3bn) turnover group issued estimated rather than final results for the second quarter and postponed its financial conference scheduled for 27 July, pending the result of the inquiry.

Ferro chief executive Hector Ortino said: “During our financial review process we recently identified several issues in the preliminary results of the Polymer Additives business.

“On further examination, we determined that the Polymer Additives business unit’s performance fell short of our expectations and that it will be necessary to take a non cash charge to earnings related to inappropriate accounting entries.”

Ortino said that the unit had both overstated its results and undermined the reliability of the forecasting process. The staff potentially responsible for the errors have either resigned or put on administrative leave pending completion of the investigation.