Profits freeze for food manufacturers

By Gwen Ridler

- Last updated on GMT

Profits froze for food manufacturers in q$ 2023. Image: Getty, Yevtony
Profits froze for food manufacturers in q$ 2023. Image: Getty, Yevtony

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Food was the only manufacturing category to see profitability stall over the ‘crucial’ Christmas period, according to inventory management software brand Unleashed latest Manufacturer’s Health Index.

In the fourth quarter of 2023, food manufacturers made an average of £1.44 for every pound invested in inventory, the same as the previous quarter and lower than the same period in 2022 (£1.48).

Most other categories saw an uplift during the reported period, with drinks manufacturers in particular reporting £1.51 made for every pound invested, up from £1.40 in Q3.

‘Treading water’

Commenting on the report, Unleashed head of product Jarrod Adam said: “Food manufacturers were treading water towards the end of 2023, with no uplift in inventory profitability over the Christmas and New Year period.

“This stands in contrast to most other areas of manufacturing which have seen growth. Overall, the businesses we surveyed across different manufacturing categories were optimistic about 2024, with almost three-quarters saying they expect demand to grow this year.”

The Manufacturer’s Health Index reveals data on gross margin return on inventory, a measure of the profits made on inventory costs, across 16 manufacturing categories. Manufacturers were also surveyed to gain first-hand insight into the specific challenges and opportunities.

Overall recovery

Despite food manufacturers plateauing in Q4 of 2023, the manufacturing sector overall reported a dramatic recovery, recording its best performance in more than two and a half years. See box below.

“The improvements in profitability show how well mid-sized manufacturers in the UK have rallied following the seemingly endless economic and supply chain uncertainty of the past few years,”​ said Adam.

“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.”

Meanwhile, last month, ingredients supplier Meadow Foods has reported its results for the 12 months up to 31 March 2023.

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