Philips makes USD 631 million provision for recall litigation costs
Amsterdam: Philips, a Dutch health technology company on Monday said it had set aside 575 million euros ($631 million) for possible litigation costs related to its global recall of respiratory machines.
Amsterdam-based Philips is grappling with the fallout of a global recall of millions of respirators used to treat sleep apnoea, announced in June 2021 over worries that foam used in the machines could become toxic. The recall has knocked off around 70 per cent of Philips' market value over the past two years as investors fear the costs of a string of lawsuits launched by concerned patients.
CEO Roy Jakobs said the provision taken in the first quarter was "in anticipation of a resolution of the economic loss class action in the U.S." and marked an "important step in addressing the litigation.
Philips is still working on a settlement with the U.S. Food and Drug Administration (FDA) and is subject to an investigation by the U.S. Department of Justice.
It said the outcomes of these events were still too uncertain to make a provision.
Philips also reported much better-than-expected first-quarter results, as core profit jumped almost 50 per cent, to 359 million euros, and comparable sales were 6 per cent higher than a year before.
Analysts in a company-compiled poll on average had forecast adjusted earnings before interst, taxes and amortisation (EBITA) would fall 15 per cent, on sales growth of less than 2 per cent. ($1 = 0.9108 euros)
Read also: Philips respiratory devices recall classified as most serious by USFDA
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