TOKYO (Reuters)-Japan Tobacco Company (JT) said on Tuesday that it plans to lay off about 1,000 employees and is focused on gaining market share in heated tobacco equipment because it expects an unexpected decline in profits this year.

According to Refinitiv's data, the company said it expects operating profit in 2021 to fall by 23% to 363 billion yen (3.46 billion U.S. dollars), while the market predicts that it will rebound slightly to 476 billion yen.

Although Japan Tobacco accounts for more than half of the domestic cigarette market, Japan Tobacco has fallen behind rival Philip Morris in the increasingly popular Heat Not Burn (HNB) cigarette category.

The company said it is considering laying off about 1,000 employees and offering voluntary and early retirement plans on the grounds that traditional cigarette sales have fallen.

At the same time, it said it would strengthen its investment in so-called low-risk products (RRP), including the heat-not-burn Ploom rod that competes with Philip Morris' IQOS.

It plans to launch a new heating rod product later this year to enhance its position in Japan, which is the world's largest product market. For example, conventional e-cigarettes containing liquid nicotine are banned.

"Japan's RRP category is the most mature and competitive in the world," Masamichi Terabatake, President and CEO of JT Group, said in a statement.

"Considering this and the decline in sales in recent years... we had to make some difficult but necessary decisions."

Reporting by Ritsuko Ando; Editing by Jacqueline Wong & Shri Navaratnam

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