Electronics manufacturers see 23% fall in sales & profit margins

UK electronics manufacturers reported a 23% decrease in first-quarter sales revenue compared to the previous quarter, according to new data from the Manufacturing Health Index published by Unleashed.

The report, which compiles data from over 600 UK manufacturers, found that average small and medium-sized electronics manufacturers generated 23% less sales revenue in Q1 2025 versus Q4 2024, and 43% less compared with Q1 2024.

The dip in sales for electronics manufacturers comes despite wider growth across small and medium manufacturers generally, which saw a 30% average increase in sales from the previous quarter and a 13% rise year-on-year, based on the 12 manufacturing categories analysed.

Profit margins for electronics producers, measured as Gross Margin Return on Inventory (GMROI), also declined by 23% quarter-on-quarter. Year-on-year, however, GMROI rose by 17%, reaching GBP £4.33 return for every pound spent on buying stock. Sales revenue for the sector dropped to GBP £380,971 in Q1 2025, from GBP £493,368 in the previous quarter.

These results coincide with recent business confidence surveys for Q1 that show overall confidence among UK firms turned negative for the first time since 2022. The industry points to ongoing tax rises, inflation, weak economic growth, and global uncertainty as contributing factors.

According to Unleashed, lead times in the electronics sector improved slightly, falling from 17 days in Q4 2024 to 15 days on average in Q1 2025. Excess stock levels, however, rose by 35% compared to the previous quarter.

Market context

Joe Llewellyn, General Manager of ERP Small Business at The Access Group, which owns Unleashed, said the overall sector performance was influenced by broader economic conditions and bank rate changes.

"Anecdotally, what we're hearing from some of our customers is that Q1 brought welcome windfalls. Some tariff-affected international customers have turned to UK firms to do business, while others raced to order more before tariff pauses came off. That's delivered a shot in the arm for some firms, but more importantly we're hearing that steadily falling bank rates are starting to stimulate the economy, which obviously is very welcome to UK manufacturers who've posted a really strong start to the year."

Across the manufacturing sector, almost all categories experienced quarter-on-quarter sales increases, with the exception of Electronics & Telecoms, down 23%, and Food, down 34%. All categories reported reduced lead times, with Sports & Entertainment showing the largest drop, from 22 to 12 days. The Industrial Machinery sector saw the largest reduction in excess stock, decreasing by 68%.