Thursday, September 18, 2003

RJR to cut 2,600 jobs

Rival cheaper smokes cited

By Paul Nowell
The Associated Press

CHARLOTTE, N.C. - R.J. Reynolds Tobacco is cutting about 2,600 jobs, or 40 percent of its work force.

The company will focus on promoting its Camel and Salem brands amid fierce competition from cheaper smokes, the nation's No. 2 cigarette maker said Wednesday.

As part of a massive restructuring, RJR said it will invest only enough in promoting the Winston and Doral brands to optimize profits.

The company plans to cut costs by $1 billion by the end of next year, chairman and chief executive Andrew Schindler said.

"Reynolds Tobacco is fundamentally changing the way it operates its business in order to deliver profit growth," Schindler said.

The major American tobacco companies have been hit hard by higher taxes, settlement payments to state governments for health costs of treating sick smokers and competition from deep-discount brands.

RJR has had a particularly tough year.

It slashed profit forecasts and surrendered its title sponsorship of the Winston Cup stock car racing circuit as the company tried to trim costs.

This summer, published reports speculated on a possible merger involving R.J. Reynolds and British American Tobacco PLC, the parent company of rival Brown & Williamson Tobacco Corp.

Schindler insisted that the job eliminations are unrelated to any potential merger.

"This has nothing to do at all with any deals in the future whatsoever," he said.

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