Dutch firm Philips said on Monday it anticipates a hit of up to €250 million from a possible safety risk in some sleep and respiratory care products, even as first quarter profits edged higher.
The company, which has diversified into healthcare and last month sold off its domestic appliance business, said net profit was €40 million in the three months to March 31, a 2.6-per cent rise on a year earlier.
Philips had sales of €3.8 billion in the first quarter, up 3.6 per cent from the same period last year.
“Regretfully, we have identified a quality issue in a component that is used in certain sleep and respiratory care products, and are initiating all precautionary actions to address this issue, for which we have taken a €250 million provision,” Philips CEO Frans van Houten said in a statement.
Regretfully, we have identified a quality issue in a component that is used in certain sleep and respiratory care products, and are initiating all precautionary actions to address this issue, for which we have taken a €250m provision- Philips CEO Frans van Houten
Philips said there were “possible risks to users” from sound-dampening foam in some sleep and respiratory care devices, which could degrade under conditions, including unapproved cleaning methods, plus high humidity and temperature. The firm said it was talking to regulators about the problem, which mainly affects first generation DreamStation products, and “initiating appropriate actions to mitigate these possible risks”.
Amsterdam-based Philips started off as a lighting company more than 100 years ago but has undergone major changes in recent years, focusing in particular on remote healthcare.
Philips announced in March that it was selling its home appliance business to Asian investment firm Hillhouse Capital for €3.7 billion, and sales from this were now listed under discontinued operations, Monday’s results statement said.
The firm said that despite continued “uncertainty” related to the COVID-19 pandemic it had upgraded its sales forecast for 2021 on the back of increased demand for its healthcare products.