Key Takeaways:
- BAT will cut 5,500 jobs and outsource 3,500 roles globally
- The restructuring targets £600 million in annual savings by 2028
- Shares fell nearly 2% as the scale of cuts surprised investors
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BAT cuts 9,000 roles in £600M restructuring toward smoke-free future
British American Tobacco will eliminate 5,500 jobs and outsource 3,500 additional roles, cutting roughly a fifth of its 47,000-strong workforce as the cigarette maker accelerates its shift toward smoke-free products.
The restructuring will generate annual savings of about £600 million ($792 million) by the end of 2028, the London-based company said Monday. The plan affects operations in the UK, Costa Rica, Mexico, Poland, Romania, Malaysia and Singapore, while the US business run through subsidiary Reynolds American will not be impacted.
"The scale of this workforce reduction is unexpected and could come as a surprise to investors," Pallav Mittal, an analyst at Barclays, said.
BAT shares fell as much as 1.9% on the London Stock Exchange following the announcement.
The company is outsourcing roles to Accenture and expanding a partnership with Indian technology firm ITC Infotech in Poland and Romania. A factory closure in South Africa, which BAT blamed on competition from illicit trade, is also part of the plan.
Chief Executive Tadeu Marroco said the changes are designed to create a "future-ready organization that is more agile, cost disciplined and technology enabled." In February, interim Chief Financial Officer Javed Iqbal flagged that artificial intelligence and data-analytics tools would affect staffing levels.
BAT reported revenue of £25.6 billion last year, down 1%, even as it added 4.7 million consumers to its smokeless brands, which include vape device Vuse and heated tobacco product Glo. The company has set a target to generate more than half of its revenue from smoke-free products by 2035.
The job cuts reflect a broader industry shift as smoking rates decline globally. UK smoking has fallen by a quarter since 2019, according to the Office for National Statistics. BAT faces intensifying competition in the vape market from challenger brands such as Lost Mary.
The cost-cutting signals management's urgency to reshape the business as traditional cigarette sales continue their structural decline. Investors will watch for further details on the restructuring timeline and smoke-free revenue growth when BAT reports its next quarterly results.
This article is for informational purposes only and does not constitute investment advice.
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