Imperial Brands to shut Russian tobacco factory

MOSCOW (Reuters) - Imperial Brands (IMB.L), the world's fourth-biggest tobacco company, will shut one of its two Russian factories in January, it said on Tuesday, citing increased taxes and the impact of changes to sales regulations.

The closure also comes as the company accelerates a cost-cutting drive in an increasingly competitive industry in which larger rival British American Tobacco (BAT)(BATS.L) has proposed a $47 billion buyout of Reynolds American (RAI.N), potentially sparking further sector consolidation.

"Among the factors that influenced our decision to close the factory was (the) increasing ... tax burden on our goods. We've been also impacted by a ban on production of packs containing more than 20 cigarettes," Imperial said in a statement.

The Yaroslavl plant operated by the group's Imperial Tobacco subsidiary, is working at 40 percent of capacity and will be shut on Jan. 1, with the loss of 284 jobs, it said.

Russia began tightening regulations of the tobacco market in 2013, restricting cigarette sales and banning advertising and sponsorship of events by tobacco companies, followed by a ban on smoking in public places.

It has also raised excise taxes, hurting a Russian cigarette market dominated by foreign groups including BAT, Imperial Brands, Japan Tobacco (2914.T) and Philip Morris (PM.N).

(Reporting by Maria Kiselyova; Editing by David Goodman)