The tobacco giant said all cigarette production for the Australian market would be moved to its plant in South Korea.

The company said stagnation in exports, decline in domestic demand, and Australia's regulation regarding cigarette production was a factor in its decision.

"With any significant export opportunity restricted by Australian government regulations, our Moorabbin factory is significantly underutilised, operating at less than half of its currently installed capacity," said John Gledhill, Philip Morris's managing director for Australia, New Zealand, and the Pacific Islands.

"Regrettably, factors beyond our control prevent us from fully utilising the facility, and accordingly it's been identified for closure."

In 2012, Australia became the first country in the world to introduce "plain packs" on tobacco products, with mixed results in terms of smoking habits.

The British government yesterday announced plans to introduce regulations to force tobacco companies to use plain packaging on cigarette boxes and other tobacco products.