British American Tobacco plans to cut about 20 per cent of its workforce as it pursues an AI-driven overhaul to lower costs and lift profits amid regulatory challenges and delayed launches.
The company said on Monday it would cut about 5500 jobs and move roughly 3500 roles to third-party firms, including Accenture, affecting around 9000 employees in total.
The restructuring excludes the US, its biggest market.
BAT said the program was expected to deliver Stg600 million ($A1.1 billion) in additional annualised savings by 2028, with Stg500 million targeted by 2027.
Still, its shares were down 1.6 per cent to Stg46.73 in morning trade on Monday, underperforming the FTSE 100, which was down 0.3 per cent.
“These changes affect many of our colleagues and we are focused on supporting them through this transition with care and respect,” CEO Tadeu Marroco said in a statement.
He said the overhaul would make the company more agile, cost-disciplined and technology-enabled.
BAT had flagged in February that its new productivity drive could lead to job cuts, but the scale of the reductions might surprise investors, Barclays analyst Pallav Mittal said in a note.
The Lucky Strike and Dunhill cigarette maker’s sales and profit growth have been sluggish in recent years, often missing or only just meeting company targets, disappointing some investors.
BAT’s main profit engine, traditional tobacco, is in terminal decline, with the company predicting a 2.5 per cent drop in industry sales volumes in 2026.
It is shifting towards smoking alternatives such as Vuse vapes and Velo nicotine pouches, but it has faced setbacks and trails key rival Philip Morris International.
US regulators have taken a tough stance on approving licences for new products such as vapes, delaying launches.
BAT says this has fuelled an influx of illegal Chinese products, weighing on its sales and market share.
US tobacco sales have also been hit as smokers swap to cheaper brands amid high living costs, while BAT also faces rising duties, tighter regulations and illicit trade in markets including Australia and Bangladesh.
BAT said most role changes had been confirmed with employees, with remaining consultations under way in line with local requirements.
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