Small and mid-sized healthcare manufacturers in the UK are facing a ‘silent killer’ as profitability has dropped, according to figures from Unleashed.
The inventory management software provider’s Manufacturing Health Index uses a big data approach to assess SME manufacturer performance.
Starting with a cohort of 1,282 manufacturers in the UK, Australia, and New Zealand, the Q1 2024 report draws on data from every purchase, sale, and stock movement made by each business in the study between Q1 2018 and Q2 2024.
UK healthcare manufacturers are facing a ‘silent killer’
The data showed that health, medical supplies, and equipment manufacturers faced a drop of 26.6% in profitability this fiscal year – the third highest out of all sectors, and sales also declined by 2%.
Their counterpart, personal care, saw a smaller drop in profitability (-1%), but revenue increased by a quarter this fiscal year.
On average, profitability across the manufacturing industry declined by 9.18% this fiscal year, despite sales performance rising by 9.16%.
On average, profitability across the manufacturing industry declined by 9.18% this fiscal year
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 with 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%.
Despite profitability concerns, the industry has cut lead times down to an average of 23.5 days – the lowest level recorded
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 in these charts refer to Gross Margin Return On Inventory (GMROI), also known as Gross Margin Return On Inventory Investment, is a profitability evaluation ratio that analyses a firm's ability to turn inventory into cash above the cost of the inventory. It doesn’t take into account the costs of labour, sales and marketing activities.
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GMROI shows how much profit inventory sales produce after covering inventory costs.
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A higher GMROI means each unit of inventory is generating a higher profit.
GMROI (profitability): year-on-year change (fiscal year up to Q2 2024 - fiscal year up to Q2 2023)
GMROI (profitability): quarter-on-quarter change (Q2 2024 - Q1 2024)
Sales revenue: year-on-year change (fiscal year up to Q2 2024 - fiscal year up to Q2 2023)
Sales revenue: Quarter-on-quarter change (Q2 2024 - Q1 2024)
