NZ Manufacturers started 2025 strong with surging sales, climbing revenue, and peaking profitability according to a new report from inventory management software provider Unleashed.

The average small-medium firm generated $310k of revenue from January 1 to March 31 2025, an 80% improvement from Q4 2024’s disappointing average of $172k, and a 25% increase on Q1 2024.

This represents the strongest average revenue numbers since Unleashed records began in 2018. 

“This is a great result for Kiwi manufacturers and the increase is notable because it’s across virtually all industries,” explains Jarrod Adam, Unleashed Software’s Head of Product.

“Last year the pinch of a stubborn recession and widespread economic uncertainty resulted in a notable slump across virtually every sector but in this most recent quarter we saw the rolling annual average of revenue lift 7.5%.” 

Industries with the most notable uptick in sales include Beverage manufacturers, up double to $245k in Q1; the Building & Construction industry, up more than 95% compared to the previous quarter to $370k; and Food manufacturing, up 113% to $282k from a very low $132k the previous quarter.

Clothing, footwear and accessories was the only exception to this trend with a relatively modest dip of 5.5% in average revenue from $111k in Q4 2024 to $105k in Q1 2025. 

The average rise in revenue across Kiwi SME manufacturing businesses is matched by a rise in profitability (measured as gross margin return on inventory), up almost 11% on the previous quarter and a full 30% compared to the same time last year.

Food and Beverage bounce back following fizzling sales in 2024

The food and beverage sectors saw a welcome upswing in sales following 2024 when they delivered  some of their worst results since Unleashed records began. 

Average Beverage sector revenue experienced a full 222% improvement YoY, alongside a more than 200% increase in profitability, to $1.78 average return per dollar spent on inventory. This profitability marker is up from a dire 0.49 in Q4 2024 and a marked improvement from the sector's record low of 0.16 posted in Q3 that year.

This is the first time the beverage sector as a whole has been in the black since 2023.

Whereas most other sub-industries saw fewer purchase orders than the previous financial year, purchase orders spiked amongst Beverage makers by 20.6% QoQ and 36% YoY.

The food sector also saw positive results, returning its best revenue quarter since 2023 with an average of $282k. This was matched by a sharp spike in profitability, up to $2.50 average gross return on inventory from an extremely low $0.53 in the previous quarter.  

The uptick in revenue and profitably was helped by a drop in excess stock across both the beverage and food sectors, down nearly 90% for beverage and 60% for food as warehouses were cleared amid strong sales.  

“These are great results for a beverage sector that has faced a steep slump for the past few years and which has been particularly hard on independent breweries. Hospitality is often on the front line of economic downturns as customers restrict spending but this is a hopeful sign that we are leaving the belt tightening phase. ” said Jarrod Adam.

Building and Construction restock 

The building and construction sector saw a 95% revenue increase between Q4 24 and Q1 2025, to $369k among firms analysed. 

In the face of potential tariffs and supply chain uncertainty last year, Building and Construction manufacturers emptied their warehouses in the back end of Q4. 

They are now restocking and one of the few sectors not clearing inventories, with excess stock up 43% QoQ with an average of $72k worth on hand per business. 

This increase in unsold inventory likely contributed to a small drop in profitability despite surging sales, down 10% to $1.74 in Q1 2025 compared to $1.95 in Q4 2024. 

“The strength of the building and construction sector tends to track the overall economy closely, so the strong sales and climbing revenue are a welcome indicator that the sector is responding well to lowering interest rates and climbing consumer confidence,” says Adams.   

Supply chain pressures ease as warehouses are emptied

In line with the trend seen in the UK and Australia, lead days for NZ manufacturers fell to incredibly low levels, with businesses sending goods in 12 days on average – a -30% reduction on the previous quarter’s 17 days and a -14% reduction YoY.

During the peak of the supply chain crisis in 2022, goods took an average of 46 days to arrive but they are now arriving in under half that time.

This saving in time also translates to savings in money, as the volume of stock required to service sales is lower when restocking can be done at short notice and in smaller quantities, likely contributing to the general rise in profitability. 

“These very low lead times represent a positive global trend which we’re seeing simultaneously in the UK, Australia and New Zealand. However, it's too early to tell if it represents genuine improvements in the global supply chain, or simply a greater proportion of domestic suppliers being used, as currency and tariff pressures made international purchasing temporarily less attractive in Q1.”

While there were likely many contributing factors, the overall result is New Zealand manufacturing firms were able to reduce their overall inventory levels by -36% to just $22,000 of excess stock held by each company, the second lowest level in the Unleashed records.

Purchasing restrained amid weakening dollar

Reflecting international trends in Australia and the United Kingdom, purchases were restrained in Q1 2025 as businesses focused on clearing warehouses instead of replenishing inventory.  

Only 64 purchase orders were issued to suppliers by the average small NZ manufacturer in the three months after Christmas, the lowest figure since at least 2018, an -11% reduction QoQ and -4.5% reduction YoY. Although the total numbers dropped, revenues remained strong, reflecting rising market confidence. 

Q1 is traditionally a period of low sales activity in both New Zealand and Australia, with many workers on extended summer holidays, but this particularly low result may also have been affected by a dip in NZD-USD exchange rates. 

“The weakening dollar may have led manufacturers to defer purchasing and wait for a stronger dollar. That seems to be paying off as the NZD trended upwards during Q1. Buyers may have also turned to local suppliers where possible. Accordingly, purchase order numbers are likely to increase in Q2 and beyond, especially if sales remain firm.”