Philips has unveiled plans to cut its IT costs and 4,500 jobs from its operations around the world, as it announced a fall in profits. 

The Dutch lighting and consumer electronics manufacturing company hopes to make €800 million (£699 million) cost savings by reducing complexity and overhead costs.

In its results today, Philips revealed a fall in net income of €448 million (£391 million) to just €76 million (£66 million) in the three months to 30 September 2011, compared with the same time last year.

Around 60 per cent of the cost reduction will be achieved through the job cuts, with the remaining 40 percent relating to savings to be made in IT and other “structural costs”, such as infrastructure and real estate.

Philips throws light on IT in £690m cost saving drive

Although the company said that 1,400 of the redundancies will be in the Netherlands, a spokesperson said that it was too early to give further country-level breakdowns.

The company employed 120,582 staff at the end of the third quarter, excluding employees at its discontinued TV business.

Frans van Houten, CEO of Royal Philips Electronics, said: “We are not yet satisfied with our current financial performance given the ongoing economic challenges, especially in Europe, and operational issues and risks. We do not expect to realise a material performance improvement in the near term.

“We are taking the right steps to achieve our 2013 mid-term financial targets.”