Philips discloses conflict with US over defibrillators

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Published Jan 24, 2017

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Amsterdam -  Medical equipment maker

Philips on Tuesday disclosed a conflict with the US government over defibrillators it sold in 2015 and before, along

with fourth-quarter earnings in which it missed analysts'

estimates.

Philips repeated its medium-term financial targets of 4

percent to 6 percent average comparable sales growth and a 1

percent improvement in adjusted EBITA margin per year despite

the defibrillator matter, which it said was civil, not criminal,

in nature and would "have a significant impact" on that

business.

"We are currently in discussions on a civil matter with the

Department of Justice representing the US Food and Drug

Administration, arising from past inspections in and before

2015, primarily on our external defibrillator business," CEO

Frans van Houten said in a statement. "While the discussions

have not yet concluded, we anticipate a meaningful impact on the

operations of this business."

Philips was forced to close a plant in Cleveland in 2014

that made high-end medical scanners due to US government

concerns over quality control in its supply chain. The company

is still recovering from that incident, which badly dented

earnings, with production ramping to full capacity in the course

of 2015 and margins at its Diagnosis division continuing to

recover.

Van Houten said on Tuesday the company was committed to

quality and had "over the last years made investments to enable

significant progress in this area."

The company reported fourth-quarter adjusted earnings before

interest, taxes and amortisation (EBITA) of 1 billion euros

($1.08 billion) compared with 842 million euros in the same

period a year earlier. Sales rose 3 percent to 7.24 billion

euros.

Analysts polled for Reuters forecast the EBITA figure at

1.04 billion euros and sales at 7.28 billion euros.

REUTERS

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