- Philips (Koninklijke)
- 29 April 2024 09:59:26
Source: Sharecast
The news follows a so-called consent decree agreed earlier this month with the Department of Justice and Food and Drug Administration, which restricts the manufacture and sale of certain sleep therapy and respiratory devices.
The company's chief executive Roy Jakobs called recent developments "significant milestones and provide further clarity on the way forward for Philips".
By 1040 in Amsterdam, the stock was up 34% at €26.53 – a level not seen since April 2022.
Respironics initiated a voluntary recall "of significant scale" in June 2021 after finding that the soundproofing foam used in certain devices might degrade into particles that could be ingested or inhaled by users. According to FDA data, more than 15m devices were recalled altogether.
On Monday, Philips said it had reached a litigation settlement with the DOJ worth $1.1bn, with payments expected in 2025 and a €982m provision being recognised in the first quarter.
Philips also concluded an agreement with insurers to pay the company €540m to cover Respironics recall-related product liability claims, with the income expected in the second quarter 2024 and payments expected sometime during 2024.
"Following the remediation of sleep therapy devices and the reassuring test results to date, these important milestones on litigation, the consent decree and insurance provide Philips with a clear path forward for sustainable value creation," the company said in a statement.
Meanwhile, Philips reported a 2.4% increase in group sales to €4.1bn in the first quarter, though comparable order intake was down 3.8% due to weakness in China due to industry-wide anti-corruption measures initiated by the government and by subdued consumer demand.
The company reported an operating loss of €824m for the quarter, which included the Respironics provision.
“We started the year in line with our plan, with order intake growth outside China turning positive and strong margin improvement," Jakobs said.
"Supported by key innovation launches and strong focus on our execution priorities, we remain confident in our performance improvement plan for 2024."
