ONE of Southampton's biggest employers has refused to rule out job losses - despite making multi-billion-pound profits.

British American Tobacco, which employs 1,200 people at its Millbrook plant, dropped the bombshell this morning as it revealed annual global profits of £1.9 billion.

The seed-to-smoke giant, which also provides supply chain employment for a further 5,000 people in and around south Hampshire, wants to cut costs by £320m between now and the end of 2007.

A BAT spokesman said the company was "keeping an eye" on staff costs as part of that. He added: "There's no indication today of what that would mean and where."

The spokesman stressed that the burden will be shared across its empire.

BAT employs about 86,000 people at 87 factories in 66 countries around the world, of whom about 2,000 work in the UK, with the bulk in Southampton and a further 700 in London.

Mike Budd, the regional officer for union Amicus, which has hundreds of members at the 26-acre factory in Southampton, today called for official reassurances that jobs would be safeguarded.

He said of the cost-cutting plan: "This will set the alarm bells ringing in Southampton.

"We want to sit down with the company and find out why they have

put these targets in the annual

report without first consulting staff and us."

It is widely accepted by both management and unions that the BAT

factory in Southampton must be run as a tight ship because cheaper manufacturing is available abroad, such as eastern Europe and Africa.

The factory makes 25 billion cigarettes a year under brand names like Dunhill, Lucky Strike and Rothmans.

Two years ago BAT closed the outdated sister plant at Darlington with the loss of 500 jobs, leaving Southampton as the company's only factory in the UK.

BAT exports more than 90 per cent of products made in this country, with a six per cent share of the UK market.

Allan Short, the head of UK operations, told the Daily Echo today: "These are very good results for the BAT Group. 2004 was a very challenging year for the UK and Ireland operations business, with the regrettable closure of our sister factory in Darlington and the consolidation of production in Southampton.

"Our environment continues to be challenging and our focus locally is to continue to improve performance and

provide an excellent service to our customers."

He declined to be drawn on whether Southampton will be in the firing line for savings.

However, the base is where the company's research and development takes place, which is of vital importance to BAT.

Scientists there are on the hunt for the tobacco industry's equivalent of the Holy Grail - a cigarette that is not harmful to health.

BAT today revealed global pre-tax profits up £300m to

£1.9 billion. The European division, which Southampton feeds into, made £726m profits, up by £190m as the number of cigarettes made rose seven per cent to 268 billion.

Shareholders are set to receive a final dividend of 29.2p per a share on May 4. Shares rose by 5p to 975p this morning.