State-owned defence group Denel’s financial results for 2013/14 show revenue growth of 17%, improved profits and the largest multiyear order book in its history – more than R30-billion to be executed over the next 20 years.
“We can safely state that Denel has now returned to profitability on a sustainable basis,” says Denel Group CE Riaz Saloojee.
“We have achieved the envisaged turnaround and are well on our way to moving the company from being a good to a great company – in the process meeting shareholder expectations and transforming Denel into a valuable and self-supporting national asset,” he adds.
Saloojee says, as a State-owned company, Denel has a primary mandate to supply the South African defence and security environment with strategic technology capabilities, products, services and support.
However, the company is also poised to play an extended role in the industrial development of South Africa and in meeting the developmental objectives of government as set out in the National Development Plan and the Industrial Policy Action Plan, he adds.
“Denel is growing from being a predominantly defence company into a broader technology clearing house that can use the skills, knowledge and expertise that we have accumulated in the defence arena to add value to high-tech engineering and manufacturing programmes to revitalise the country’s infrastructure,” notes Saloojee.
Denel has strengthened its reputation as a high-performing technology powerhouse on the African continent, a global player in the defence and aerospace environments and a company with the capacity to expand its role in the broader manufacturing sectors.
The company strongly supports the view that State-owned companies must serve as effective strategic instruments of industrial policy and economic inclusion. This is also reflected in the group’s spending of more than half a billion rands on research and development and a further R64-million on skills development and training.
“Our defence and aerospace businesses are in great shape. We expect that government will soon commence with the implementation of the recommendations of the 2014 South African Defence Review, which was published in March,” says Saloojee.
“The Defence Review serves a triple purpose: it closes the gap between the 1998 Review and the strategic situation of today; it moves away from the business management-inspired organisation and processes that have demonstrably failed; and it provides the basis for long-term planning by the Defence Force,” according to defence news portal Defence Web.
“The local defence industry, including Denel, will benefit greatly from the recommendations and the imminent establishment of a National Defence Industry Council to consult with government on issues such as joint planning, policy formulation, export support and future defence acquisitions,” he adds.
In the past financial year, the group’s revenue grew to R4.58- billion, which can mostly be attributed to a 28% surge in exports.
Exports now account for 50% of total revenue, including participation in a number of countries in the Middle East, Asia and South America for the development and production of missiles, and turrets for infantry combat vehicles, and the manufacturing of advanced aerostructures for military and civilian airlift, while the use of the Denel Overberg Test Range by international clients also contributes to this revenue.
Further, the company is confident that its delivery on key local defence requirements, such as the intended rejuvenation of the South African Army’s fleet of armoured and transport vehicles, as well as investments in the maritime environment and the civil security arena, will boost locally earned revenue in years to come, notes Saloojee.
The group’s net profit has improved by R123-million to R194-million and the operating profit has grown by 91%, he concludes.