British American Tobacco cost-cutting hits 9000 roles
British American Tobacco plans to cut nearly 20 percent of its workforce as it continues an AI-focused overhaul to cut costs and boost profits amid regulatory challenges and delayed launches.
The company said Monday it would lay off about 5,500 people and transfer about 3,500 roles to third-party firms including Accenture, affecting about 9,000 employees in total.
The restructuring excludes its largest market, the United States.
BAT said the program is expected to deliver additional annual savings of Stg 600 million ($1.1 billion) by 2028, with Stg 500 million targeted by 2027.
Still, its shares fell 1.6 per cent to Stg46.73 in morning trade on Monday, underperforming the FTSE 100, down 0.3 per cent.
“These changes affect many of our colleagues, and we are focused on supporting them with care and respect during this transition,” CEO Tadeu Marroco said in a statement. he said.
He said the revamp will make the company more agile, cost-disciplined and technology-driven.
Barclays analyst Pallav Mittal said in a note that BAT signaled in February that the new productivity push could lead to layoffs, but the size of the reductions may surprise investors.
Sales and profit growth for the maker of Lucky Strike and Dunhill cigarettes have been slow in recent years, often missing or only meeting company targets, frustrating some investors.
Traditional tobacco, BAT’s main profit engine, is in steep decline, with the company forecasting a 2.5 percent decline in industry sales volumes in 2026.
Vuse is moving into smoking alternatives such as e-cigarettes and Velo nicotine pouches, but has faced setbacks and outperformed its main rival, Philip Morris International.
US regulators have taken a tough stance on approving licenses for new products such as e-cigarettes, delaying launches.
BAT says this has triggered an influx of illegal Chinese products, negatively affecting its sales and market share.
U.S. tobacco sales have also been hit as smokers turn to cheaper brands due to high living costs, while BAT also faces rising tariffs, tighter regulations and illicit trade in markets such as Australia and Bangladesh.
BAT said most role changes have been approved with employees, with the remaining consultations continuing in line with local requirements.
