British American Tobacco (BAT) on Thursday said it planned to lay off 4% about 2,300 of its workforce including a fifth of senior managers,globally by January as part of the company’s reform measures.
The announcement comes one day after US President Donald Trump’s administration said it would soon ban flavored e-cigarette products to stem a rising tide of youth users following a spike in vaping-linked deaths
The newly promoted chief executive Jack Bowles said, “My goal is to oversee a step change in new category growth and significantly simplify our current ways of working and business processes, whilst delivering long-term sustainable returns for our shareholders. This is a vital first move,”
Bowles said the jobs cuts, of which more than 20 percent will be senior roles, would see BAT “better placed” to deliver £5.0 billion ($6.2 billion, 5.6 billion euros) in new category revenues by 2024.
“Today’s announcement represents a bold first step for new chief executive Jack Bowles, but he must hope the crackdown on vaping doesn’t see his growth ambitions run out of puff,” said Russ Mould, investment director at AJ Bell.
Shares of the second-largest tobacco company by sales were up 1.6 %, the biggest boost to the broader FTSE index .FTSE on Thursday, after the maker of Lucky Strike and Dunhill cigarettes said it will cut 2,300 roles as it eliminates duplication and consolidates business units.
BAT sells the Vuse e-cigarette in the United States, a product it acquired after buying U.S. rival Reynolds American for $49 billion in 2017. It also sells the Vype e-cigarette devices in many European markets, including the United Kingdom. Both are available with e-liquid flavorings.
Almost three years ago, BAT took control of US peer Reynolds American in a deal worth about $50 billion in a move that specifically targeted the lucrative US market and the fast-growing e-cigarette sector.