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Falling profitability a ‘silent killer’ for UK electronics manufacturers

5th September 2024

Unleashed

Sheryl Miles

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Small and mid-sized electronics manufacturers in the UK are facing a ‘silent killer’ as new figures show profitability has dropped, despite strong sales.

Electronics and telecommunications manufacturers faced a drop of 11% in profitability this fiscal year, despite a mighty 31% increase in revenue. On the other hand, electrical and electronic components manufacturers saw profitability rise by 17.4% this fiscal year – the third highest out of all industries – and revenue rise by over 38%.

On average, profitability across the manufacturing industry declined by 9.18% this fiscal year, despite sales performance rising by 9.16%.

The figures were revealed in the latest Manufacturers’ Health Index by inventory management software provider Unleashed. The figures are compiled quarterly based on data from purchases, sales, and stock movements among SME manufacturers across the UK, Australia, and New Zealand.

However, some sectors are powering through including energy and chemical manufacturers who came out on top with a 31.37% jump in profitability according to Unleashed’s data, followed by furniture manufacturers at 21.89%.

Other signs of improvement came from the personal care sector where Q2 profitability was up 95.63% on Q1.

Sharp drop in quarterly sales revenue for UK manufacturers

UK sales performance also dropped sharply this quarter compared to the overall upward trend. Compared to Q1 2024, total revenue declined by 22% in Q2 2024.

Electrical and electronic component manufacturers’ revenue declined by 44% – the largest drop in revenue in Q2 2024. Building and construction manufacturers weren’t far behind with a revenue decline of 43%.

Clothing and footwear manufacturers were the only industries to see an increase in revenue of 5% in Q2 2024.

Despite profitability concerns, the industry has cut lead times down to an average of 23.5 days – the lowest level recorded.