South Africa’s manufacturing industry has long been a cornerstone of the country’s economy and despite its decline over the last few years it is still providing significant employment and supporting business activity.
However, the sector now faces a critical juncture, grappling with challenges such as pressurised profit margins, rising costs, and increased financial risks in certain subsectors. Despite these obstacles, the industry remains resilient, characterised by earnings growth, improved liquidity, and emerging opportunities fuelled by technology and innovation.
PwC’s South Africa 2025 Manufacturing Analysis highlights the financial performance of JSE-listed manufacturing companies, unpacking the industry’s evolving financial landscape by revealing emerging vulnerabilities alongside areas of competitive strength. It also outlines the strategic levers manufacturers must pull to not only withstand disruption but to thrive amid rapid transformation.
Nqaba Ndiweni, Africa Consumer, Industrial Products and Services (CIPS) industry leader at PwC South Africa points out that manufacturers globally are confronting an expanding array of challenges that are fundamentally transforming the industry.
It is no longer just about producing goods; the entire “how we make” ecosystem is evolving, requiring both established and new players to collaborate in innovative ways to overcome shared challenges and seize new opportunities. For South African manufacturers, rapid adaptation is not optional, it is a priority.
“Our 2025 Manufacturing Analysis examines this evolving financial landscape, identifying new risks as well as areas of strength for manufacturers,” says Pieter Theron, Industrials and Services Africa leader at PwC SA. “It also outlines key actions required not only to survive ongoing disruption, but truly to thrive in this fast-moving environment.”
Value in motion through reconfiguration and innovation
Manufacturing production declined by 1,4% in December 2025 compared to the previous year, according to Stats SA, signalling the need for manufacturers to rethink their approaches and drive innovation. Digital transformation is at the forefront with automation, AI, and advanced technologies enhancing productivity and agility. Yet technology is only part of the equation.
Businesses must also build resilient supply chains by diversifying suppliers, improve sustainability through energy-efficient processes and closed-loop systems, and address challenges such as skills shortages, geopolitical trade tensions, increasing regulations, and growing consumer demands for personalisation. Collectively, these pressures make it clear that radical change is no longer optional, but unavoidable.
A new era of manufacturing is underway. Manufacturers are embracing new technologies such as automation, 3D printing, and AI to boost productivity, efficiency, and agility. Many companies are already using these advancements to reinvent themselves. As a result, global manufacturing revenues of up to $1,8-trillion could be redistributed from 2025 onwards.
“To thrive, manufacturing businesses must explore new growth domains where companies not only collaborate across sector boundaries to meet fundamental human needs, but also explore new areas of business such as different customer segments like consumer or industrial products, downstream retail and logistics and upstream technology development, or adjacent digital industries or products,” says Theron. “Reinvention must start now, focusing on priorities that respond to the reconfiguration already underway. This means pushing hard towards innovation imperatives that secure competitive advantages in technology and trust, and turning obstacles such as climate threats into enablers of growth.”
Financial performance: Key highlights
Industry leverage has climbed: The average debt-to-equity ratio rose from 1.01 in 2024 to 1.63 in 2025, reflecting greater use of debt to support growth across the sector. Steel & Iron remain the most leveraged sectors, while Publishing & Professional Services sit at the lowest end of the spectrum.
Interest cover is solid at the aggregate level: The industry’s average interest cover ratio stood at 4.31 in 2025, indicating a generally healthy debt servicing position. However, the Steel & Iron sector reports a negative interest cover ratio, signalling significant financial strain.
Profitability pressures persist: Gross margins remain comparatively strong, yet operating and net profit margins are trending down, emphasising the need for tighter cost discipline. Containers & Packaging and Packaged Foods continue to post high operating profitability.
Market capitalisation pulled back: Total market cap declined 13,55% year-over-year, from R557,22-billion to R481,72-billion, driven largely by pharma, specialty chemicals, and paper and wood.
Liquidity is broadly sound: Current and quick ratios are generally satisfactory across the sector, with Publishing & Professional Services notably strong, while Metal Fabrications & Mining, and Steel & Iron face potential short-term cash challenges.
Inventory dynamics are shifting: Rising inventory-to-net-working-capital ratios point to increased stockholding in capital-heavy segments like Steel & Iron and Metal Fabrications & Mining, whereas service-focused sectors remain light on inventory.
Macro tailwinds emerged: Manufacturers benefited from reduced electricity load-shedding, slower input cost inflation, export sales growth, interest rate cuts, and modest improvements in rail and port service quality in 2024/2025.
The future of manufacturing in South Africa
South Africa’s manufacturing sector is undergoing a structural reset. Despite earnings growth, stronger liquidity, and rising exports, many subsectors face margin compression with declining profits and returns below benchmarks, particularly in Steel & Iron and Agricultural Machinery.
Challenges such as climate risk, energy instability, and fragile supply chains threaten long-term resilience. Yet transformation is underway, with sectors such as packaged foods, containers & packaging, and industrial distribution demonstrating that efficiency, technology, and strategic reinvention can drive success even under difficult conditions.
“Although load-shedding has eased, energy reliability remains uncertain, making smarter energy use and alternative sources vital for resilience,” says Theron. “Global supply disruptions highlight the need for agile, locally-based supply chains.
“Meanwhile, technology remains a key differentiator, offering opportunities to enhance productivity through automation, improved forecasting, and better decision-making,” he adds. “As the sector evolves, building trust through reliable operations, robust governance, and secure digital systems – alongside targeted investments – will enable manufacturers to grow with confidence in the years ahead.”