DUTCH medical devices maker Philips said on Monday (Apr 29) it had agreed to pay US$1.1 billion in a settlement of personal injury cases in the United States related to the global recall of ventilators used to treat sleep apnea.
The company said it did not admit any fault or liability, but the settlement would end uncertainty over the US litigation.
Amsterdam-based Philips has been grappling with the fallout of its recall of millions of breathing devices and ventilators for three years, as fears of large litigation bills lopped off about two-thirds of its market value.
The devices were recalled in April 2021 because of concerns that the foam used in them could degrade and become toxic, carrying potential cancer risks.
Philips earlier this month announced the final details of a consent decree reached with US authorities in January, spelling out the improvements it needs to make at its Respironics plants in the US.
“The approved consent decree and now the resolution of the personal injury and medical monitoring litigation in the US are significant milestones and provide further clarity on the way forward for Philips,” CEO Roy Jakobs said.
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Philips said it had also reached an agreement with insurers over compensation of 540 million euros (S$788 million) for product liability costs, to be received in the second quarter of 2024.
It booked a provision of 982 million euros in first-quarter results for the settlement payments, which it expects to fund from cash flow next year.
Philips on Monday also reported its first-quarter earnings, which beat analyst expectations with an 8 per cent jump in core profit to 388 million euros.
Analysts in a company-compiled poll on average had predicted adjusted earnings before interest, taxes and amortisation (Ebita) of 361 million euros, roughly stable from a year before.
Comparable sales growth of 2.4 per cent was in line with expectations, leading to a higher-than-expected 9.4 per cent profit margin.
Order intake, however, continued to fall due to slower sales in China and was 3.8 per cent lower than in the first three months of 2023.
“We started the year in line with our plan,” Jakobs said. “With order intake growth outside China turning positive and strong margin improvement.” REUTERS
