British American Tobacco’s (LON:BATS) share price has climbed higher in London in today’s session, with investors reacting positively to the company’s simplification plans. The move, which will see the company axe more than 2,300 jobs, comes as the cigarette maker looks to drive growth at its new generation products.
As of 09:39 BST, BAT’s share price had added 1.90 percent to 3,100.92p. The stock is lending support to the FTSE 100 index along with Morrisons (LON:MRW), with the benchmark currently standing 0.13 percent higher at 7,347.69 points. The tobacco group’s shares have lost more than 17 percent of their value over the past year, as compared with about a 0.5-percent gain in the Footsie.
BAT announces simplification plans
BAT announced in a statement this morning that it is planning to simplify its business in an effort to deliver savings which can be reinvested in the growth of its portfolio of new categories such as vapour, tobacco heating products and oral tobacco. The company’s simplification proposals include reducing management layers, creating fewer larger more accountable business units, better leveraging its Global Business Services activities, as well as simplifying all key business processes and ‘ways of working’.
The programme, which is planned to be substantially complete by January next year, envisages a reduction of around 2,300 roles globally.
“Since taking on the role of Chief Executive five months ago, I have been clear that I wanted to make BAT a stronger, simpler and faster organisation and ensure a future fit culture,” BAT’s chief executive Jack Bowles commented in the statement, adding that as a result, the company will be better placed to deliver on its target of £5 billion of revenues in its new categories business by 2023/24.
Analysts on FTSE 100 tobacco maker
Liberum Capital reaffirmed BAT as a ‘buy’ today, without a target on the BAT share price. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average valuation of 3,761.33p.