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British American Tobacco plans to cut around 20% of its workforce as it moves forward with using artificial intelligence (AI) to restructure its operations with the aim of reducing costs and increasing profits.
Cigarette maker Lucky Strike and Dunhill said Monday they plan to cut about 5,500 jobs and outsource about 3,500 roles, including Accenture. The restructuring will affect about 9,000 employees in total, while not including the US
BAT did not specify where the jobs would be cut as its biggest driver of traditional tobacco profits faces a long-term decline amid an increase in smoking habits.
The company said the cost-cutting plan is expected to deliver $793 million in annual savings by 2028, with most of that amount targeted for 2027.
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British American Tobacco has announced job cuts as it uses AI to cut costs. (BSIP/Universal Images Group via Getty Images)
BAT CEO, Tadeu Marroco, said the restructuring will make the company faster, control costs and be able to use technology.
“These changes affect many of our partners and we are focused on supporting them in this change with care and respect,” Marroco said in a statement.
The company’s sales and profit growth have been slow in recent years, often missing or falling short of the company’s goals and disappointing some investors. BAT aims to grow revenue between 3% and 5% annually in the medium term.
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| A ticker | Security | Finally | Change | Change % |
|---|---|---|---|---|
| BTI | BRITISH AMERICAN TOBACCO PLC | 62.74 | -0.02 |
-0.03% |
The company said it has begun to improve its production over the past 18 to 24 months, a plan that includes the previously announced plant closures in South Africa.
BAT expects sales of traditional tobacco products to fall by 2.5% across the industry this year. Because of that trend, the company is shifting its focus to other products such as Vuse vapes and Velo nicotine pouches, although it is lagging behind industry rival Philip Morris International.
US regulators have adopted a onerous approach to licensing new products such as vapes, which has slowed the launch of new products. BAT said regulatory challenges have led to an influx of illegal Chinese products, which has weighed on its sales and market share.
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Vuse vapes are a British-American vapes focus on changing consumer habits. (Daniel Acker/Bloomberg via Getty Images)
Cigarette sales in the US have also been affected as smokers switch to cheaper products amid higher living costs, while BAT faces rising import taxes, stricter regulations and illegal trade in markets such as Australia and Bangladesh.
BAT said a number of role changes have been confirmed for staff, while the remaining negotiations are ongoing in line with local requirements.
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The company also said outsourced roles include Global Service Hub positions in Costa Rica, Mexico, Romania and Malaysia, as well as some roles in Pakistan, and other digital and technology roles in Poland and Romania.
Reuters contributed to this report.
