British American Tobacco (BAT), the London-listed maker of Lucky Strike and Dunhill, said on Monday that it will cut 5,500 jobs worldwide.

BAT also stated the overhaul would also see around 3,500 positions outsourced to third parties, with the two measures together touching roughly 9,000 staff, close to a fifth of its 47,000 workers.

According to AFP, the company is aiming to save £600 million (€695m) a year by 2028.

The restructuring reaches across BAT's operations worldwide but spares the US, its single largest market, which is run through its Reynolds American subsidiary.

Like its rivals, BAT is grappling with the steady decline of traditional smoking in its established markets, as health concerns and tighter regulation reduce the number of cigarette buyers.

The company has pinned its future on what it calls "smokeless" products, the Vuse vaping brand, glo heated-tobacco devices and Velo nicotine pouches, and has set itself a target of drawing half its revenue from these newer lines by 2035.

However, that transition has not been smooth.

In the US, the rollout of new nicotine products has been held up by a lengthy regulatory approval process, constraining sales in the market that matters most to the group.

CEO Tadeu Marroco framed the cuts as part of building what he described as a more agile, cost-disciplined and technology-enabled company, adding that BAT was committed to supporting affected staff through the change with care and respect.

The savings target announced comes on top of £500 million (€580m) in cuts the company had already pencilled in for 2027, and part of the outsourced work is set to go to consulting firm Accenture.

Investors gave the news a muted reception, with BAT shares slipping around 2.5% halfway through London's Monday trading session.

Analysts at Barclays noted that while the productivity drive had been signalled earlier in the year, the sheer scale of the reductions could still catch the market off guard.

The move drew a wider warning from Russ Mould, investment director at AJ Bell, who said BAT was the latest company to lean harder on technology to run its operations and launch products faster.

The scale of the cutbacks, Mould cautioned, was "a sign of the times" and a worrying signal for the wider jobs market.