Japan Tobacco Inc. is cutting 1,600 jobs and closing four domestic factories as part of its plan to boost competitiveness at home and profitability.

The job cuts will be made through a voluntary retirement program that will be offered to eligible employees in the domestic tobacco business and corporate functions, JT said in a statement Wednesday.

"Our Japanese domestic tobacco business operates in an increasingly challenging environment, mainly due to consecutive tobacco tax increases, tightening of smoking-related regulations, growing health consciousness and an aging society," the company in a statement to the Tokyo Stock Exchange.

Asia's largest listed tobacco maker, JT faces declining demand in the home market amid the shrinking population and has been expanding overseas to offset this weakness. The ratio of smokers in Japan has fallen 4 percentage points to 20.9 percent over the last four years, according to the company's website.

Overseas revenue accounts for about half of JT's sales, according to data compiled by Bloomberg.

The most recent voluntary retirement program was in the year that ended in March 2005 and 5,796 employees accepted that plan, spokesman Hisashi Sekiguchi said before the announcement. The company cut jobs at that time to increase competitiveness, he said.

JT shares climbed 3.65 percent to ¥3,550 after NHK reported the company plans to shed 20 percent of its workforce and close some factories.

In April, JT forecast net income will climb 21 percent to ¥415 billion while sales will gain 12 percent to ¥2.37 trillion in the year ending on March 31. A weaker yen is boosting the value of revenue from tobacco operations overseas.

The government, which had owned 50 percent of the company, cut its stake to 33 percent in March to help pay for reconstruction in the Tohoku region.