KUALA LUMPUR: Supermax Corp Bhd fell in the early session today after Canada terminated its sourcing contract for nitrile gloves with the glove producer over allegations of forced labour.
As at 10.17am, Supermax shed four sen or 2.96 per cent to RM1.31, with 6.63 million shares done.
Canada paused imports of the gloves in November 2021 to decide the next steps after receiving an audit report on the alleged labour practices.
"Although Canada represents around 9.0 per cent of the group's total market share and this fluctuates based on the tenders awarded each year, we think if the issue is not resolved soon, it will have a substantial impact on the group's future expansion plans and hence, earnings," MIDF Research said in its research note today.
The research firm said with the prompt response of Supermax to mediate the situation by introducing the foreign worker management policy on Jan 3, to speed up its efforts to meet the labour standards of the International Labour Organisation, the time taken to overcome the termination of its contract could be sooner than other glove manufacturing companies.
Despite Supermax stating its efforts to improve its environmental, social, and governance standards since 2019, MIDF Research opined that the current consecutive forced labour allegations highlight the lack in application of the policies designed across the group.
"We believe that with proper implementation of the policies, the group will be able to weather the storm efficiently," it added.