FX.co ★ Philips Q1 Loss Widens, Backs FY24 Outlook; To Pay $1.1 Bln To Settle Respironics Litigation

Philips Electronics NV, a renowned Dutch consumer electronics company, reported an increasing net loss in the first quarter. The net loss attributable to shareholders has risen to 999 million euros, equivalent to 1.10 euros per share compared to last year's 665 million euros or 0.72 euros per share. This increase was primarily due to the litigation provision for Respironics and a higher tax expense, though there was a partial offset by enhanced operational performance.

For the entire year 2024, Philips maintains its expectation of a comparative sales growth of 3-5% and an adjusted EBITA margin between 11 and 11.5%.

The company has reaffirmed its confidence in the delivery of the 2025 plan, acknowledging that uncertainties still loom. Following a mediation with Judge Diane Welsh, Philips and the plaintiffs have arrived at an agreement to settle personal injury litigation and a medical monitoring class action in the US to address related uncertainties.

Despite denying any fault or liability, or any reported injuries from Respironics' devices, Philips and Philips Respironics have acknowledged the settlement of claims filed in the US courts and potential claims presented to the census registry. Accordingly, Philips Respironics will pay a total of $1.1 billion in 2025, financed by Philips' cash flow generation, leading to a recognized provision of 982 million euros in the first quarter of 2024.

Furthermore, Philips Respironics agreed to a court-approved consent decree in April 2024 and secured final court approval for a previously mentioned economic loss settlement in the US, provisioned in the first quarter of 2023. Philips has also finalized an agreement with insurers to receive 540 million euros as coverage for Respironics' product liability claims related to recalls. This income is expected to be recognized in the second quarter of 2024, with payment anticipated within the same year.

Adjusted earnings from continuing operations attributable to shareholders in the first quarter was 235 million euros or 0.26 euros per share, an improvement from 192 million euros or 0.21 euros per share the previous year. Although the company's sales for the first quarter decreased to 4.14 billion euros from 4.17 billion euros, there was a 2.4% increase in comparable sales due to growth in Diagnosis & Treatment and Personal Health sectors, slightly offset by a decrease in Connected Care.