Gale Pacific’s Rising Net Debt Signals Risks as US Market Weakens

FY25 Financial Snapshot

Gale Pacific closed FY25 with revenue of AUD 172 million, a modest 1.2% decline from the previous year, while EBITDA held steady at AUD 12 million, aligning with company guidance. Normalised EBITDA, which excludes one-off charges, rose 4.8% to AUD 19.5 million, reflecting underlying operational strength despite a challenging environment. However, the company reported a net loss after tax of AUD 5.2 million, a significant swing from a small loss the prior year, largely driven by non-recurring costs including the implementation of a new enterprise system and executive leadership changes.

Regional Performance Divergence

The Americas region faced headwinds with revenue down 11.3% to AUD 75.7 million, impacted by elevated tariffs on China-sourced products and soft consumer sentiment. The second half saw a sharper 25% revenue drop, prompting price increases in collaboration with key retailers like Walmart and Home Depot to partially offset cost pressures. Despite these challenges, Gale Pacific expanded its retail footprint by adding over 640 stores and 4,500 product placements, including new distribution channels in Mexico and Argentina.

Conversely, the Australia/New Zealand segment delivered a robust 7.6% revenue increase to AUD 79.5 million, buoyed by strong grain storage fabric sales and record seasonal demand at Bunnings. The company also advanced sustainability efforts with a quarter of production using recycled materials. Developing markets, particularly the Middle East, posted a 14.4% revenue rise driven by government contracts and distributor growth in Saudi Arabia, alongside gains in Europe and Asia.

Strategic Response and Outlook

In response to the US market’s subdued trading conditions, Gale Pacific has initiated a comprehensive operating model reset aimed at simplifying operations, eliminating inefficiencies, and materially reducing costs. This restructuring is critical as retail demand remains constrained by higher shelf prices linked to tariff-related input costs. Parallel to this, the company is diversifying its manufacturing base beyond China, with completed trials in Southeast Asia for roller shades and progressing long-term supply partnerships to mitigate tariff exposure.

Looking ahead, Gale Pacific plans to deepen customer relationships and expand value-added offerings in core markets while pursuing market development opportunities in climate-appropriate regions across the Middle East and Asia. The company intends to provide updated performance guidance, including progress on the US reset, at its upcoming Annual General Meeting.

Balancing Challenges with Growth

While Gale Pacific’s FY25 results reflect the pressures of global trade tensions and shifting consumer dynamics, the company’s strategic initiatives and regional growth pockets provide a foundation for recovery. The increased net debt position, rising to AUD 8.9 million from AUD 0.7 million, underscores the investment in transformation efforts. Investors will be watching closely how effectively Gale Pacific executes its US reset and leverages emerging market opportunities to restore profitability momentum.