The UK electronics and telecommunication manufacturing sector has witnessed a remarkable increase in profitability during the Golden Christmas Quarter, getting the year off to a positive start. The increase in profits is attributed to a surge in demand for products and more stable supply chains, and has particularly benefited medium-sized firms in the sector. This information comes from the Manufacturers Health Index, which is compiled on a quarterly basis by inventory management software brand, Unleashed.
Some standout figures from the research show that electronics manufacturers generated £2.69 for every pound spent on inventory in the final quarter of 2023, a substantial increase from the £1.54 generated in the third quarter. This figure surpasses the industry average of £2.33 across 16 manufacturing categories. The sector has shown significant growth when compared to the same quarter in the previous year, which reported earnings of £1.30 for every pound spent on the inventory.
Jarrod Adam, Head of Product at Unleashed, commented on the sector's performance, stating: "Electronics manufacturers saw profitability increase at the end of 2023, with an impressive improvement in the final quarter." He further revealed that the businesses surveyed across different manufacturing categories were optimistic about the coming year, with nearly three-fourths predicting growth in demand.
The bigger picture for the UK's manufacturing sector also looks promising. Unleashed's report indicates a dramatic recovery, with its best performance in over two and a half years recorded in the final quarter of 2023. Across all sectors, firms averaged earnings of £2.33 for every pound spent on inventory, resulting in an increase from £1.98 in the previous quarter and £2.05 in the same period of 2022. Out of the 16 manufacturing categories analysed, 12 saw an increase in profitability during Q4, with the clothing and energy chemicals sectors leading with £4.53 and £3.30 respectively.
However, not all categories enjoyed such success. There was a notable fall in profitability in the plastics and rubber industry, which saw returns drop to £1.16 from £2.65. The health and medical manufacturers and cosmetics and personal care also saw reductions of 16p and 8p respectively.
These upward trends in profitability point towards the resilience of mid-sized manufacturers in the UK, who were able to bounce back amid the economic and supply chain uncertainties that have loomed over the past few years. As Adam concludes, "In navigating the supply chain and economic challenges they've faced, many firms have embraced technology to refine their inventory management processes, enabling them to achieve better margins on their inventory spend."
