Amsterdam, April 24 (BNA): Dutch health technology company Philips (PHG.AS) said today, Monday, that it has allocated 575 million euros ($631 million) to cover potential litigation costs related to its recall of respirators worldwide.
Amsterdam-based Philips is grappling with the fallout from a recall of millions of respirators used to treat sleep apnea globally, announced in June 2021 over concerns that the foam used in the machines could become toxic.
The recall has shut down about 70% of Philips’ market value over the past two years as investors fear the costs of a series of lawsuits brought by the patients involved.
Chief Executive Officer Roy Jacobs said the first-quarter provision was “in anticipation of resolution of the economic loss class litigation in the United States” and represents “an important step in addressing the litigation.”
Philips is still working on a settlement with the US Food and Drug Administration (FDA) and is under investigation by the US Department of Justice.
She said that the outcome of these events was still too uncertain to make an allowance.
Philips also reported much better-than-expected first-quarter results, with underlying profit jumping nearly 50% to €359m and comparable sales 6% higher than a year earlier.
Analysts surveyed by the company averaged that adjusted earnings before interest, taxes, and amortization (EBITA) would decline 15%, despite sales growth of less than 2%.
AOQ