Public Enterprises Minister Lynne Brown
Photo by: Duane Daws
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/14 were announced at its head office in Centurion, south of Pretoria, on Friday.
Revenues grew by 17%, net profit increased by 63% and exports rose by 28%. Exports now account for 50% of the group's total revenues. Fitch Ratings upgraded Denel's credit rating to AAA.
These results were welcomed by Public Enterprises Minister Lynne Brown. "It's come a long way," she highlighted in her address at the results presentation."The company has showed a great resilience. This is a good example of what I call getting the basics right."
She thanked the Denel board, management and staff for this success. Brown noted that it had been achieved in a global defence market that was dominated by just 15 countries. The group was an example of good corporate governance.
"We are not celebrating yet as a lot of work still needs to be done," she cautioned. "I have reminded the board that the business is still a work in progress. The balance sheet is still supported by the R1.85-billion government guarantee and thus the company needs to wean itself off government support."
Brown also stressed the need for transformation, describing it as a "survival imperative" for the group. "The company needs to transform its workforce to avoid the impending skills gap brought about by retirements."
She concluded her address by stating that "we are seeing the fruits of the long-term turnaround strategy. These results show that we are on the path of sustainability."
Responding to questions from the media, regarding the government guarantee to the group, Brown affirmed that "[w]e hope to see them [Denel] in future becoming more sustainable and pay their own way. ... [But] I'm happy for Denel to retain its guarantee, for now."