Pretoria - Government wants Denel to grow into a preferred global supplier in the defence industry, Public Enterprises Minister Malusi Gigaba told reporters at the Denel post-Annual General Meeting on Monday.
“Our objective, as government, is for Denel to grow into a global player in the defence industry and to become a preferred supplier and prime contractor for the Department of Defence’s large programmes as well as for the African continent,” he said.
To achieve this, Gigaba said the state-owned company (SOC) would have to aggressively invest in research and development, which will help to secure long-term sustainability.
Gigaba said he was currently engaging with the Minister of Defence and Military Veterans to strengthen their collaboration, so that the South African National Defence Force (SANDF) becomes the platform to showcase Denel’s capabilities.
In support of the collaborative initiatives between the Public Enterprises and Defence Departments, the minister said his department was preparing to undertake a study into the economic benefits derived from the Rooivalk Attack Helicopter manufacture programme, in which Denel Aviation was the prime contractor and the Original Equipment Manufacturer (OEM).
He said the study would assist government in developing the business case for further investment in design and manufacturing.
With regard to pursuing business in Africa, Gigaba said he has directed the Board of Denel to develop a comprehensive African strategy and align it with the department’s own strategy so that the company can leverage off government’s diplomatic programme on the continent.
Improvement in performance
The minister said he had noted improvements in the performance of the business, which include:
- The 10% revenue growth, driven by a 34% increase in exports;
- 73% improvement in net profit of R71 million during the year under review, marking a third consecutive year of positive financial performance;
- 35% reduction losses in Denel Aerostructures (DAe); and
- 54% improvement in debt-to-equity ratio.
Gigaba said he also noted the following positive developments:
- Improvements in the terms of the Denel Aerostructures’ Airbus A400M contract;
- The introduction of new capabilities into the SOC through the Tawazun Dynamics joint venture between Denel Dynamics and Tawazun Holdings of the UAE;
- Denel Land Systems acquisition of a majority stake in Light Mobility Technologies (LMT) to the introduction of armoured vehicles; and
- The accreditation of Denel Aviation as a maintenance, repair and overhaul (MRO) Centre for Russian Helicopters.
“The expansion of Denel’s technological and defence capabilities will be its strong value proposition as it positions itself as global player in the export market. I am encouraged by the company’s financial performance, business developments and new initiatives for the year under review,” Gigaba said.
However, the minister conceded that the company was not yet out of the financial woods.
“I have asked both the Board and management to develop a long-term growth strategy, which will place the company in a sustainable growth trajectory, with Africa firmly in its focus.
“The long-term strategy will take into account Denel’s’ advanced manufacturing capabilities and leveraging with other aviation asserts in the department’s portfolio to unlock opportunities through collaboration between SAA Technical, SA Express Technical and Denel Aviation,” he said.
Gigaba said the other opportunity was in Supplier Development obligations associated with the SAA fleet renewal, contributing to the expansion of Denel’s aerostructures, engineering and maintenance capabilities.
“I have also directed the Board of Denel to pursue collaboration with SAA to leverage on this procurement to help deepen industrial capabilities, skills development and job creation,” he said. - SAnews.gov.za
