RJ Reynolds halves work force

Reynolds is battling declining sales

Tobacco giant RJ Reynolds is cutting 2,600 US jobs, or 40% of its workforce, in order to reduce costs.

The lay-offs are expected to save $1bn by late 2005, the company said.

Reynolds' cigarette sales have dropped, partly as a result of competition from cheaper foreign imports.

The North Carolina-based firm has decided to concentrate on its top brands Camel and Salem to beat the decline.

Court victory

News of the reorganisation sent the firm's shares 7% up in pre-market trading.

Reynolds has already begun implementing $800m worth of cuts, including the job reduction.

It expects to see $300m in savings in 2003.

Shares of Altria Group, which owns its competitor Philip Morris, were up too on Wednesday after the cigarette maker won a key court victory.

The Illinois Supreme Court has cut almost in half a $12bn bond that Philip Morris must post to appeal a key verdict.