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Philips CEO Frans van Houten will step down as chief of the Dutch health technology company on 15 October. Roy Jakobs, head of the company's Connected Care businesses, will take over the helm, the company announced on Tuesday.

"The supervisory board and current Philips CEO Frans van Houten have agreed that with the end of his third term in sight, the time is right for the change in leadership," Philips said in a statement.

An extraordinary general meeting of shareholders will be held next month on 30 September to appoint Roy Jakobs as President and CEO, effective 15 October, 2022.

Frans van Houten will act as advisor to the company -- supporting the transition -- until 30 April, 2023.

Over the past 12 years, Van Houten led the transformation of the once-sprawling conglomerate into a focused healthcare specialist, spinning off its lighting and consumer electronics divisions.

"...much remains to be done to enhance the resilience of Philips to manage through current setbacks and adverse market conditions," Van Houten said in a statement.

Shares of the Dutch medical equipment maker climbed 0.38% to 19.50 euros at 12:25 IST.

Philips cuts estimate for FY sales growth

Last month, the company posted a bigger-than-expected drop in second-quarter core earnings, saying supply shortages and lockdowns in China had dented sales.

The company cut its estimate for full-year sales growth to between 1% and 3%, from 3% to 5%, while forecasting second-half growth of 6% to 9% on a strong order backlog.

Philips over the past year has been grappling with the fallout of a massive recall of ventilators and seen its market value tumble by around 15 billion euros since June 2021.

The company now focuses on medical imaging, monitoring and diagnostic equipment and competes against General Electric and Siemens Healthineers.

It shocked investors last year by recalling 55 lakh ventilators used for the treatment of sleep apnea.

Foam used for sound dampening can degrade and emit small particles that irritate airways, while gases released by the degrading foam may also be toxic or carry cancer risks, Philips announced at the time.

The recall and repairs, which the company recently said were around half complete, will likely cost around 900 million euros.

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