British American Tobacco (BAT) announced on Thursday an AI-driven productivity program designed to simplify and automate operations, which is expected to result in significant job cuts. Interim finance chief Javed Iqbal stated that this initiative would "affect staffing levels" and impact the "size of the organization," though the exact number of affected employees was not specified. The company, which employs approximately 49,000 people globally, aims to achieve around £600 million in cost savings by the end of 2028 through its Fit2Win program, indicating a move towards a more digital and AI-focused business model.
This restructuring comes as BAT reported higher annual profits, partly fueled by the strong performance of its Velo nicotine pouches. Velo now holds the number two market share in the U.S., trailing only Philip Morris's Zyn, and has seen substantial growth due to features like higher nicotine strengths and competitive pricing. Revenue from BAT's new categories, including Velo, grew by double digits in the second half of 2025, reaching £3.62 billion, and 7% for the full year.
Despite the positive performance in newer products, BAT faces challenges. Overall group revenue growth was tempered to 2.1% (compared to 1.3% in 2024), partly due to a more than 7% fall in revenue from the Asia-Pacific, Middle East, and Africa segment in 2025. Vaping revenues also suffered from illicit products in key markets like the U.S. and Canada, and excise changes in the UK. CEO Tadeu Marroco expects a flat U.S. vape performance in 2026. The company also struggled in Australia and Bangladesh, with a forecast for Australia to remain a drag in 2026 due to rising duties and an illicit cigarette market. Adjusted earnings per share rose 3.4% to 340.5 pence, and BAT announced a £1.3 billion share buy-back program for 2026.
