British American Tobacco (BAT) has announced plans to cut about 5,500 jobs and transfer roughly 3,500 roles to third-party firms as part of a major AI-driven restructuring aimed at reducing costs and boosting profitability.
The company disclosed in a statement on Monday that the exercise would affect about 9,000 employees in total, with outsourcing partners including Accenture. The restructuring, however, excludes the United States, BAT’s largest market.
According to the company, the transformation programme is expected to generate an additional £600 million (about $793 million) in annual savings by 2028, with £500 million targeted by 2027.
Despite the announcement, BAT shares fell 1.6 per cent to £46.73 by 0940 GMT, underperforming the FTSE 100 index, which declined by 0.3 per cent.
Chief Executive Officer, Tadeu Marroco, acknowledged the impact of the decision on employees, saying the company remained committed to supporting affected workers with care and respect throughout the transition.
BAT had earlier indicated in February that its productivity drive could lead to job cuts, but analysts say the scale of the planned reductions is larger than many investors expected.
The maker of Lucky Strike and Dunhill cigarettes has struggled with sluggish sales and profit growth in recent years, frequently falling short of performance targets.
The company has also faced declining tobacco sales in the United States as consumers switch to cheaper cigarette brands amid rising living costs. In addition, BAT continues to grapple with higher duties, stricter regulations, and increasing illicit tobacco trade in markets such as Australia and Bangladesh.
