Lucky Strike maker BAT signals possible job cuts amid latest restructure
The group will cut the number of its business regions from four to three and reduce its business units from 16 to 12.
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Your support makes all the difference.Lucky Strike and Camel cigarette maker British American Tobacco has warned of possible job losses as it revealed an overhaul of its regional structure and business divisions.
The group said the plans will see the number of regions cut from four to three – merging the European business with the Americas division – while it will reduce its business units from 16 to 12, with changes taking effect from April.
It is currently consulting with affected staff and said there may be job losses as a result of the restructure, but declined to give more details.
British American Tobacco (BAT), which employs more than 52,000 people worldwide, said the consultation is taking place with affected staff at various levels, including senior management.
As our transformation journey towards our strategic milestones gathers pace, we need to further sharpen our operating model, streamline our business to drive agility and continue to enhance organisational capabilities
The firm said its three new regions will be: USA, where it has the Reynolds American business; Americas and Europe; and Asia Pacific, Middle East and Africa.
Its European business is currently split out as a fourth region.
BAT also said it would ramp up the company’s ongoing “market exit plans” under the restructure, signalling further moves to pull out of certain countries, having already halted operations in Myanmar, Iran and Russia in recent years.
BAT said: “The new structure will increase the efficiency of BAT’s geographical footprint, optimise market prioritisation and will be based on fewer, larger business units, enabling even greater collaboration and accelerated decision-making across BAT.”
As part of the changes, BAT has also created two new board roles – chief transformation officer and director of combustibles – and unveiled a wider shake-up of senior managers.
Chief executive Jack Bowles added: “As our transformation journey towards our strategic milestones gathers pace, we need to further sharpen our operating model, streamline our business to drive agility and continue to enhance organisational capabilities.
“As part of our commitment to building a better tomorrow, the changes we have announced today will drive increased focus, accelerate our transformation and fuel growth as we strengthen the foundations of our future as a category-led enterprise.”
BAT is already working through a cost-saving drive, which aimed to strip out £1.5 billion by the end of 2022.
The group is expected to give further details of cost savings at its annual results on February 9.
The firm is revamping the business as it switches away from cigarettes and invests heavily in alternatives, such as vaping and nicotine pouches.
It said in December that the group now has 21.5 million customers using its new category products, including Vuse vape pens and Glo heated tobacco.
Owen Bennett, an equity analyst at Jefferies, said the latest changes may speed up transformation at BAT, but also raise questions over the need for another restructure.
He said: “These changes come only five years after the last regional structure change, and just two years after the last big strategic review that led to the new strategy A Better Tomorrow.
“Both of these developments were supposed to accelerate the business transformation.”
He added there were “questions around why another change is needed, and is this perhaps an indication that prior actions have not been as effective as intended, and progress not as far along as may have been hoped”.