Dutch consumer electronics giant Philips Electronics NV reported on Monday significant first-quarter losses after facing litigation concerning its Respironics subsidiary and higher tax expenses.
For the full year 2024, Philips continues to expect 3%-5% comparable sales growth and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 11%-11.5%.
The company reiterated its confidence in delivering its 2025 plan, acknowledging that uncertainties remain.
Philips said it had reached an agreement with plaintiffs following mediation with Judge Diane Welsh to settle personal injury litigation and a medical monitoring class action in the US, aiming to resolve uncertainties associated with litigation.
The case concerns the 2021 voluntary recall of Philips Respironics' continuous positive airway pressure (C-PAP) devices.
While Philips and Philips Respironics deny any fault or liability, or that any injuries resulted from Respironics' devices, the settlement addresses claims filed in US courts and potential claims submitted to the census registry, the company said.
Under the settlement, Philips Respironics will pay a total of $1.1 billion, with payments expected in 2025 funded from Philips' cash flow generation.
Consequently, an equivalent €982 million provision was recognized in the first quarter of 2024.
Additionally, Philips Respironics in April signed a court-approved consent decree and obtained final court approval for a previously announced economic loss settlement in the US, for which a provision was recognized in the first quarter of 2023.
Philips also concluded an agreement with insurers to receive €540 million to cover Respironics recall-related product liability claims.
This income is anticipated to be recognized in the second quarter of 2024, with payment expected during the same year.
Philips reported on Monday that its adjusted income from continuing operations attributable to shareholders for the first quarter was €235 million or €0.26 per share compared to €192 million or €0.21 per share in the prior year.
Sales for the first quarter declined to €4.14 billion from €4.17 billion.
Group comparable sales increased 2.4%, driven by growth in the diagnosis & treatment and personal health segments, partly offset by a decline in the connected care sector.