Small and mid-sized industrial manufacturers in the UK are facing a ‘silent killer’ as new figures show profitability has dropped, despite sales rising.
Industrial machinery, raw material and equipment manufacturers saw profitability decline by a quarter this fiscal year, despite a 1.5% increase in revenue. On the other hand, industrial manufacturers performed marginally better than healthcare who saw a decline of 26.6% in profitability.
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.
Category breakdown
GMROI* (profitability): year-on-year change (fiscal year up to Q2 2024 - fiscal year up to Q2 2023)
Industry category Year-on-year change
Beverages (alcoholic and non-alcoholic) -29.17%
Food -27.02%
Health, Medical Supplies and Equipment -26.66%
Industrial Machinery, Raw Material and Equipment -25.63%
Sport, Entertainment, Recreation -24.05%
Electronics, Telecommunication -11.19%
Personal Care -1.18%
Clothing, Footwear, Accessories 2.78%
Building and Construction 12.87%
Electrical and Electronic Components 17.47%
Furniture, Fixtures, Home Furnishing (homeware) 21.89%
Energy, Chemicals 31.37%
All industries -9.18%
GMROI (profitability): quarter-on-quarter change (Q2 2024 - Q1 2024)
Industry category Quarter-on-quarter change
Food -38.17%
Building and Construction -23.85%
Health, Medical Supplies and Equipment -20.53%
Industrial Machinery, Raw Material and Equipment -14.47%
Sport, Entertainment, Recreation -1.29%
Beverages 13.45%
Energy, Chemicals 15.31%
Electronics, Telecommunication 17.03%
Clothing, Footwear, Accessories 19.82%
Furniture, Fixtures, Home Furnishing (homeware) 21.67%
Electrical and Electronic Components 22.19%
Personal Care 95.63%
All industries -8.74%
Sales revenue: year-on-year change (fiscal year up to Q2 2024 - fiscal year up to Q2 2023)
Industry category Year-on-year change
Energy, Chemicals -22.27%
Building and Construction -9.82%
Health, Medical Supplies and Equipment -2.03%
Industrial Machinery, Raw Material and Equipment 1.44%
Food 4.04%
Clothing, Footwear, Accessories 7.35%
Sport, Entertainment, Recreation 16.67%
Furniture, Fixtures, Home Furnishing (homeware) 19.98%
Personal Care 25.34%
Electronics, Telecommunication 30.97%
Electrical and Electronic Components 38.67%
Beverages (alcoholic and non-alcoholic) 42.83%
All industries 9.16%
Sales revenue: Quarter-on-quarter change (Q2 2024 - Q1 2024)
Industry category Quarter-on-quarter change
Electrical and Electronic Components -44.12%
Building and Construction -42.76%
Furniture, Fixtures, Home Furnishing (homeware) -36.71%
Health, Medical Supplies and Equipment -32.32%
Personal Care -31.04%
Energy, Chemicals -29.02%
Electronics, Telecommunication -28.53%
Sport, Entertainment, Recreation -21.06%
Food -17.42%
Industrial Machinery, Raw Material and Equipment -15.21%
Beverages (alcoholic and non-alcoholic) -5.64%
Clothing, Footwear, Accessories 4.89%
All industries -21.82%