• Stabilisation of trading conditions in both Retail and Commercial segments
• Strong start to the year in Australia's Commercial sales of grain fabric
• Comprehensive reset of U.S. operating model to improve underlying profitability

Gale Pacific Limited (GALE) has reported a stabilisation of trading conditions in the first quarter of FY26 compared to the final quarter of FY25. Sales activity in key areas has shown resilience in both the Retail and Commercial divisions, with particularly strong performance in Australia's Commercial sales of grain fabric, which are running ahead of expectations. The company's Americas business also saw improved trading, broadly level with the first quarter of the prior year. Despite these areas of encouragement, overall Group sales of $40.2 million (unaudited) were 4.5% lower than the first quarter of the prior year, due to the earlier sell-in of retail inventory to customers ahead of the go-live of the new ERP platform in October 2025. This impact is expected to normalise through the second quarter. In response to challenges in the U.S. market and with the key objective of improving underlying profitability on an ongoing basis, Gale commenced a comprehensive reset of its U.S. operating model. Changes implemented across Q1 FY26 are expected to deliver cash expenditure savings of approximately $3.1 million in FY26, equating to recurring annualised cash expenditure savings of approximately $3.7 million beyond FY26. The changes include 12 employee redundancies (24% of total workforce), mainly focused on administration and management roles following the simplification of operating structures.

The company is pleased with the reasonable first quarter trading and the progress made on operational improvement initiatives. The company will provide a further update on strategic initiatives at the Company's Annual General Meeting in November 2025.