Gale Pacific Reshapes US Operations Amid Tariff-Driven Revenue Slump
Gale Pacific’s FY25 results reveal a challenging year marked by tariff disruptions in the Americas, prompting a strategic overhaul of its US operations to safeguard future growth.
- FY25 EBITDA reported at $12.0 million, normalised $19.5 million
- Americas region revenue down 25% in H2 due to US tariffs on China imports
- US operations restructured to lower costs and improve competitiveness
- Supply chain diversification underway to mitigate tariff exposure
- Board committed to restoring profitability and sustainable growth
A Year of Headwinds
Gale Pacific Limited, a key player in industrial textiles, faced a turbulent FY25 as global trade tensions and tariff policies unsettled its operations, particularly in the Americas. Despite stable performance in Australia/New Zealand and developing markets, the company’s overall financial results fell short of expectations, with reported EBITDA at $12.0 million and a normalised figure of $19.5 million, roughly flat compared to the prior year.
Tariff Impact and Regional Challenges
The crux of Gale Pacific’s difficulties lay in the Americas region, historically its most profitable market. Mid-year announcements by the US Administration introduced new tariffs on China-produced goods, directly affecting Gale Pacific’s supply chain and sales during the critical northern summer trading period. This led to a sharp 25% decline in second-half revenue and a $5.3 million hit to regional EBITDA, underscoring the vulnerability of the company’s exposure to geopolitical trade shifts.
Strategic Response and Restructuring
In response, the company has taken decisive steps to recalibrate its US operations. A restructuring initiative aims to implement a leaner, lower-cost operating model designed to restore competitiveness and protect margins amid ongoing market pressures. This includes a comprehensive review of operational functions to enhance efficiency and agility, positioning Gale Pacific to better navigate the uncertain trading environment ahead.
Supply Chain Diversification
Recognising the risks of concentrated supply sources, Gale Pacific is actively advancing supply chain diversification efforts. By reducing reliance on China-produced products, the company seeks to mitigate the impact of tariffs and build resilience against future trade disruptions. This strategic pivot is critical to sustaining long-term growth and maintaining market relevance.
Looking Forward
CEO Troy Mortleman, who has been at the helm since the leadership restructure last year, is expected to provide further clarity on immediate stabilisation measures and longer-term growth plans. While the near-term outlook remains cautious due to elevated input costs and constrained consumer demand, the Board’s commitment to disciplined cost management and strategic focus offers a foundation for renewed momentum.
Bottom Line?
Gale Pacific’s restructuring and supply chain shifts mark a critical juncture as it seeks to rebound from tariff-induced setbacks.
Questions in the middle?
- How quickly can Gale Pacific’s US operations return to profitability post-restructuring?
- What specific supply chain alternatives is the company pursuing beyond China?
- How will elevated input costs and pricing pressures affect FY26 revenue and margins?
