Why is the Ansell share price under pressure on Wednesday?

The Ansell Limited (ASX: ANN) share price has clawed back some of the more than 5% losses posted earlier today.

After closing 8.6% higher yesterday, the Ansell share price is currently down 0.5% in early afternoon trading.

Yesterday, ASX investors were clearly pleased with the company’s full-year financial results.

Today, media reports have emerged that the health and safety products company has been accused in a United States court of “knowingly profiting” from slave labour.

First, a quick recap of the FY22 results.

Ansell share price leapt higher despite profit fall

Ansell’s full-year revenue of US$1.95 billion was down 3.7% from the prior year. Operating profits took an even bigger slide, down 35.7% to US$158.7 million.

The company said the declines were primarily driven by less demand from COVID-19 related safety products.

Earnings per share (EPS) for FY22 of US$1.25 per share were within guidance, with Ansell forecasting EPS in the range of US$1.15 to US$1.35 for FY23.

The Ansell share price gained, as the results exceeded market expectations, with analysts pointing to potential revenue growth in FY23.

Which brings us to…

Allegations of slave labour at Malaysian factory

The Ansell share price looks to be coming under pressure today following media reports workers at one of its third-party suppliers endured slave labour conditions in a factory owned by Malaysian-based Brightway.

As ABC News reported, the case was just lodged in a United States court by 13 people who worked in the factory.

The workers allege that Ansell and US surgical and medical instruments manufacturer Kimberly-Clark “knowingly profited” off their exploitation, as the companies had contracted the factory to make latex gloves.

Allegations include excessive recruitment fees, passport confiscation, abuse, excessive work, and abysmal living and working conditions.

ABC reported that Ansell had not responded to questions about whether it was still using Brightway as a supplier. Brightway products have already been banned in the US over prior labour violations.

Ansell stated it did engage in business with Brightway.

According to a company spokesperson:

Brightway is an independent third-party supplier who has manufactured and provided finished goods to Ansell and other purchasers.

Brightway products have never represented more than a very small percentage of total Ansell purchases from third parties, and it has been one of many direct suppliers to Ansell.

Ansell share price snapshot

Despite yesterday’s bounce, the Ansell share price is down 17% in 2022. That compares to a year-to-date loss of around 8% posted by the S&P/ASX 200 Index (ASX: XJO).

The post Why is the Ansell share price under pressure on Wednesday? appeared first on The Motley Fool Australia.

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More reading

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• Why Altium, Ansell, Monadelphous, and Pilbara Minerals shares are charging higher
• Ansell share price surges 10% as full-year revenue comes in at US$1.9b
• Ansell share price in focus as FY22 profit tumbles 36%

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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