KUALA LUMPUR (March 31): British American Tobacco (Malaysia) Bhd (KL:BAT) on Tuesday announced that it may reduce its employees as part of a workforce ‘optimisation’.

Affected employees will receive their statutory and contractual entitlements, including retrenchment benefits, where applicable, the cigarette manufacturer said in an exchange filing. The move is due to the start of its new route-to-market distribution model on July 1, the company noted.

“Workforce optimisation is included as part of the company's operational efficiency initiative and intended to align the company's workforce with future operating requirements and business direction,” it added.

The filing did not disclose the number of employees that will be affected. The company has 283 employees, according to its 2024 annual report.

In 2022, British American Tobacco began shifting away from a system where distributors physically visited retail stores for sales to a model that allows retailers to place orders through multiple channels — online, through sales representatives or calling designated call centres.

The company said the approach would help to reduce costs by 20% to 25%.

The announcement comes amid rising regulatory pressures on Malaysia's tobacco industry in the recent years. A nationwide ban on the sale and use of vapes is also reportedly being planned this year, starting with disposable products.

Last year, the government a 42.8% increase in excise duty hike — the first increase in a decade — on tobacco and heated tobacco products under Budget 2026. New pictorial health warnings were introduced on cigarette packaging and the government also banned retail display of cigarettes.

In 2024, the Control of Smoking Products for Public Health Act came into force, which, among others, makes it illegal to sell any tobacco products including vapes to individuals under 18.

British American Tobacco’s shares paused for Tuesday's noon trading break at RM5.65, valuing the company at RM1.61 billion.