Ruble Devaluation Expected to Hit Costa Mesa Firm Hard

ICN Pharmaceuticals Inc. of Costa Mesa likely will take a financial hit from the devaluation of the Russian ruble.

Before the currency’s tumble this week, analysts were expecting the Costa Mesa drug maker’s rapidly growing business in Russia to produce about $200 million in revenue and $10 million in profits this year. That represents about 26% of the company’s overall revenue last year and about 9% of profits.

Now, analysts’ projections for both revenue and profits from Russia will likely be cut by a third.

What’s more, the company may take a charge to adjust its balance sheet. Eugene Melnitchenko, a Sutro & Co. analyst, says the company’s equity likely would be reduced by about $17 million, assuming it writes down the value of cash, inventories, customer and supplier bills and other items on its books.

On Tuesday, ICN spokesman Terry Souers described the company’s financial exposure in Russia as “manageable.” He noted that since the end of June, ICN has slowed down paying its bills in the event of a possible devaluation.

However, Souers also said that key ICN executives are on vacation this week and that the company hasn’t decided how it may account for the change in its financial statements.

The uncertainties haven’t fazed investors. ICN shares have gained $2.13 in New York Stock Exchange trading since Friday, closing Tuesday at $26.75.