British American Tobacco Announces Major Restructuring with Job Cuts and AI Focus
The FTSE 100 tobacco behemoth British American Tobacco (BAT) has confirmed a sweeping plan to enhance productivity through significant workforce reductions and an increased reliance on artificial intelligence. The announcement came on Thursday as the company reported robust annual profits, underscoring a strategic shift towards digital transformation.
Productivity Initiatives and Workforce Impact
Interim finance chief Javed Iqbal revealed to the Financial Times that the "productivity initiatives" are designed to streamline operations, resulting in a decreased headcount and a more digitally oriented business model. While BAT has not specified the exact number or locations of the impending job cuts, the company employs approximately 49,000 people across more than 140 global markets.
This restructuring is integral to the Fit2Win programme, launched last year to drive cost efficiencies. The initiative aims to secure around £600 million in savings by the close of 2028, positioning BAT for sustained financial health amid evolving market dynamics.
Financial Performance and New Category Growth
In its latest update, BAT disclosed that total revenues experienced a slight decline of 1% to £25.6 billion in 2025 compared to the previous year. However, this was counterbalanced by a notable 5.5% increase in revenues from new categories, which reached £3.62 billion. The surge was primarily fueled by heightened demand for Velo oral nicotine products.
The modern oral business, dominated by Velo nicotine pouches, saw an impressive 47.4% year-on-year revenue jump, with robust performance in key regions including the United States, Scandinavia, the United Kingdom, and Switzerland. This growth helped mitigate a downturn in vaping revenues, which were adversely affected by illicit products in the US and Canada, as well as excise adjustments in the UK and other markets.
Leadership Perspective and Shareholder Value
Chief Executive Tadeu Marroco expressed satisfaction with the company's accelerating momentum throughout 2025, which enabled full-year results to meet the upper end of guidance. He reiterated confidence in achieving mid-term targets from 2026 onwards, emphasizing a commitment to delivering sustainable shareholder value.
Marroco highlighted plans for robust cash returns through progressive dividends and sustainable share buy-backs, including a £1.3 billion programme slated for 2026. Despite the positive outlook, BAT's shares dipped by 1.1% on Thursday morning, reflecting market reactions to the restructuring news.
The strategic move to integrate AI and reduce operational costs marks a pivotal step for BAT as it navigates the complexities of the global tobacco industry, balancing traditional revenue streams with innovative product categories to secure future growth.
