* Expects Q2 EPS $0.80-$0.90 vs est $0.95
* Sees Q2 costs at $38-$40 mln vs $28.3 mln last year
* Raises Q2 capital spending forecast to $80-$90 mln
* Shares fall as much as 9 percent
May 7 (Reuters) - Oilfield services provider Lufkin Industries Inc forecast a weak second quarter as it expects costs to increase by up to 41 percent due to development of new products.
Lufkin shares were down 6 percent at $68.07 in midday trade. They fell as much as 9 percent to $65.84.
The company’s stock was the biggest drag on the broader Philadelphia Oil Service Index, which was down less than 1 percent. The stock has mirrored the 20 percent fall in the broader index over the past year.
The company, which completed three deals during the first quarter, expects costs to be in the range of $38 million to $40 million, up from $28.3 million in the year-ago quarter.
“I think it could be 18 months to two years for the rollout of the new combined products,” Chief Executive Jay Glick said on a conference call on Monday.
The company, which sells and services oilfield pumping units and power transmission products, will look at adding manufacturing capacity and has raised its capital spending forecast to a range of $80 million to $90 million, excluding acquisitions.
Lufkin, whose rivals include Oil States International Inc and Dril-Quip Inc, had previously forecast capital spending of $66 million for the second quarter.
Lufkin, which operates an oilfield equipment manufacturing plant in Comodoro Rivadavia, Argentina, has been battling labor unrest there which has affected orders.
“Argentina continues to be a wild card for us ... we will watch the developments carefully,” Glick added.
Lufkin, which also has plants in Houston and Canada, expects to earn 80 cents to 90 cents per share on revenue of $300 million to $310 million in the second quarter.
Analysts, on average, were expecting earnings of 95 cents per share on revenue of $316 million, according to Thomson Reuters I/B/E/S.
For the first quarter, it reported an adjusted profit of 56 cents per share against analysts’ estimates of 59 cents per share.
Lufkin adjusted its full-year forecast to account for charges related to its $127-million acquisition of UK-based Zenith Oilfield Technology Ltd. It also closed deals for Datac Instrumentation Ltd and RealFlex Technologies Ltd in January.