While sales took a hit, efficiency gains have helped UK electronics manufacturers recover their margins and put them on a firm footing for 2026, new figures reveal.

Revenue from sales declined in Q3 2025, with small and mid-sized firms generating an average of £379,262 – just 5.5% less than the previous quarter.

Profitability – measured as Gross Margin Percentage (GMP) – dropped slightly by -3.7pp compared to the previous quarter but jumped by +6.4pp compared to the same period last year.

Lead times fell from 20 to 14 days (-30% QoQ), while purchase orders (POs) and stock on hand declined by -17.4% and -39% respectively.

The figures appear in the latest manufacturing report from inventory management specialist Unleashed, an inventory management software platform popular with small and mid-sized manufacturers. Its quarterly report is based on data from more than 600 UK firms using the software, across manufacturing categories such as food and drink, clothing and fashion, and construction.

Joe Llewellyn, GM of ERP Small Business at The Access Group, the parent company of Unleashed, said electronics manufacturers had moved quickly to protect their margins:

“The last quarter was characterised by a determined push towards efficiency.”

“Although sales dropped, manufacturers responded quickly to lessen the impact. Our data shows purchasing and lead times were both down quarter on quarter, a sign of weakened demand reflected in the contracted PMI for this period. This, along with ongoing cost pressures, prompted electronics manufacturers to move from cautious ‘Just in case’ stock building in Q2 to a leaner just in time approach, cutting their margins and stock on hand to protect their margins and cash flow.”

Looking ahead, he added that operational excellence would be key to succeeding in a low-growth, high-cost environment.

“Going into 2026, electronics manufacturers will need to make the most of data to enable forecast-driven replenishment, track landed costs in real-time, and identify and convert excess stock into cash. Doing more with less is the new reality, seen in the continued trend in industrial automation.”

Unleashed’s report also compared performance across different manufacturing categories.

Overall, firms saw a 12.9% QoQ surge in sales, and a +1.3pp uplift in GMP to 39.66%. Purchase orders also dropped by 30% QoQ, as did stock on hand (-27.2%), and lead times by 8 days. However, other categories such as electrical also saw sales drop and profitability improve YoY.