British American Tobacco NYSE:BTI is moving ahead with a major restructuring plan as the Dunhill cigarette maker works to cut costs and simplify its global operations. The company is set to cut 5,500 jobs and outsource another 3,500 roles by the end of this year, equal to about one-fifth of its 47,000-person global workforce. These figures do not include BAT's US business, which operates through Reynolds American, and form part of the company's plan to deliver 600 million in annual cost savings by the end of 2028.
BAT shares fell as much as 1.9% in London, trimming year-to-date gains after the stock had risen nearly 13% through Friday's close. Barclays analyst Pallav Mittal noted that while investors were already aware of the savings program, the scale of the workforce reduction could come as a surprise. The company said certain roles in the UK, Singapore, Costa Rica, Mexico, Poland, Romania and Malaysia have moved to Accenture, while some roles in Pakistan have been outsourced to Systems Ltd.
The restructuring comes as BAT faces weaker demand for traditional cigarettes in many markets while investing more heavily in smoke-free nicotine products such as Vuse vapes and Velo nicotine pouches. BAT wants more than half of its revenue to come from smoke-free products, a shift that could become increasingly important as consumers look for alternatives to smoking. The company has also been closing traditional cigarette factories, including its eighth-largest cigarette factory in South Africa, while investors may now focus on whether BAT can deliver about 500 million of planned savings by 2027 and keep momentum in newer nicotine categories.