British American Tobacco to cut 9,000 jobs with cost-cutting plan

Jun 29 (Reuters) – British American Tobacco plans to cut about 20% of its workforce as it pursues an AI-driven restructuring to reduce costs and boost profits amid regulatory challenges and launch delays.

The company said on Monday it would cut around ‌5,500 jobs and transfer approximately 3,500 roles to third-party companies, including Accenture, affecting around 9,000 workers in total. The restructuring excludes the United States, its largest market.

BAT said the program is expected to generate additional annualized savings of £600 million ($793 million) by 2028, ⁠with a target of £500 million by 2027.

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Still, its shares fell 1.6% to £46.73, underperforming the FTSE 100, which fell 0.3%.

SCALE OF REDUCTIONS

“These changes affect many of our peers and we are focused on supporting them through this transition with care and respect,” said chief executive Tadeu Marroco in a statement.

The Brazilian CEO stated that the restructuring would make the company more agile, with greater cost discipline and more technology-oriented.

Sales and profit growth at the maker of Lucky Strike and Dunhill cigarettes has been slow in recent years, often falling short or just barely meeting the company’s goals, which has disappointed some investors.

STRATEGIC CHANGES

BAT’s main profit driver, traditional tobacco, is in irreversible decline, with the company forecasting a 2.5% drop in industry sales volumes this year.

The company is turning to alternatives to smoking, such as ⁠Vuse vaporizers and Velo nicotine sachets, but has faced setbacks and lags behind its main rival, Philip Morris International.

US regulators have taken a tough stance on approving licenses for new products such as vaporizers, delaying launches. BAT claims this has driven an influx of illegal Chinese products, hurting its sales and market share.

Tobacco sales in the US have also been hit as smokers switch to cheaper brands amid high costs of living, while BAT also faces rising taxes, stricter regulations and illicit trade in markets such as Australia and Bangladesh.

BAT said the majority of role changes have now been confirmed with staff, with the remaining consultations ongoing in line with local requirements.

(Reporting by Yamini Kalia in Bengaluru and Emma Rumney in London)