What happened
Shares of Dutch medical equipment maker Royal Philips (PHG 1.69%) rose by more than 14% in early trading Monday after the company announced first-quarter earnings. The stock is up more than 44% this year but down more than 19% over the past 12 months.
So what
Philips' stock had been lagging because of concerns over the recall of faulty ventilators and sleep apnea masks made by its subsidiary, Philips Respironics, as well as lawsuits connected to the recalls. However, the company apparently allayed some investors' fears when it announced more details for its plans for the recalls and better-than-expected earnings on Monday.
The healthcare company reported revenue of 4.2 billion euros ($4.6 billion), up 6% year over year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was 359 million euros ($398 million), up 47.7% over the same period last year, beating analysts' estimates of 226 million euros ($250 million).
The company has tightened its belt through layoffs and other cost-cutting measures, and that seems to be having an impact. Philips said it has trimmed 5,400 jobs and plans a total of 10,000 layoffs.
Now what
Philips isn't out of the woods yet, but at least it has a path to get there. The U.S. Department of Justice is still looking into the recalls, and there may be more lawsuits on the horizon. The company said it plans to become profitable again next year, but so far this year, it has lost 655 million euros ($738 million). However, company CEO Roy Jakobs said the company's restructuring plan is on track, and its supply chain problems have lessened.
