(Bloomberg) — Shares of ATA IMS Bhd. slumped as much as 30%, the steepest intraday decline since July 2011, after Dyson ended its relationship with the Malaysian company following an audit of its labor practices.
ATA’s shares plunged to 82 sen in a fifth straight day of declines, a streak that has erased almost half the company’s market value. The stock is the among the top 10 traded shares on the exchange, with volume 12 times the average for this time of day.
Dyson terminated the relationship after allegations by a whistleblower led to an audit of ATA’s labor practices, the British company said in an emailed statement to Bloomberg on Thursday, adding that ATA had been informed of the decision. The termination was first reported by Reuters earlier on Thursday.
“Despite intense engagement over the past six weeks, we’ve not seen sufficient progress and have already removed some production lines,” Dyson’s spokesperson said. “We hope this gives ATA the impetus to improve, and enables an orderly withdrawal in the interests of the workers they employ.”
Labor Issues
The development deals another blow to Malaysia, whose palm oil and rubber gloves producers have come under intense scrutiny over poor labor practices. The U.S. Customs and Border Protection previously banned imports from palm oil companies FGV Holdings Bhd. and Sime Darby Plantation Bhd., and last month halted shipments from rubber glove maker Supermax Corp.
ATA, which makes parts for Dyson’s vacuum cleaners and air purifiers, said it received the notice of termination on Wednesday and it comes into effect on June 1, 2022, according to an exchange filing on Thursday. It had previously denied the allegations of forced labor at its factories.
ATA said it had been in talks with Dyson on the findings of the audit of its labor practices and had taken steps including engaging professional advisers to assist the company to review, verify and validate the findings of the audit.
Meanwhile, the shares of ATA’s peers — V.S. Industry Bhd. and SKP Resources Bhd. — surged to records in Kuala Lumpur trading. V.S. Industry rallied as much as 16%, while SKP jumped 19%
(Updates with ATA’s comment in sixth paragraph)
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
