State owned defence company Denel is pursuing orders worth R35 billion and hopes to grow its revenue to more than R7 billion over the next five years, targeting primary markets in Africa, the Middle East, South America and the Asia-Pacific.
The company expects half of its future orders to come from Africa, including within South Africa, and intends to create a long-term order book of more than five times its turnover. Denel has R22 billion worth of contracts to fulfil over the next seven to ten years.
Riaz Saloojee, Denel Group Chief Executive, told the Parliamentary Portfolio Committee on Public Enterprises that the company is modernising its products to give them a global appeal, from artillery, unmanned aerial vehicles and maintenance services.
Denel said it is investing more than R528 million a year in Research and Development which will grow in the coming years with a specific focus in the fields of artillery and unmanned air vehicle production. “Denel is improving its technology base in the field of asymmetrical warfare through the acquisition of specialised armoured vehicle manufacturer, LMT, and the introduction of new missile technology.” LMT is involved in producing Badger armoured vehicles for the South African Army and Denel Dynamics is working on the A-Darter air-to-air missile and Umkhonto ground-to-air missile.
Denel is also investing in skills, spending 3% of its payroll – R46 million – on skills development and bursaries.
“By 2018 Denel will have moved from its current position as a ‘good company’ to be a ‘great company’ and a national asset that all South Africans can be proud of,” said Saloojee, pointing out that the process is underway with restructuring. Over the last year, 11 businesses have been integrated into six divisions, reducing costs.
Revenue has improved by more than 10% and profit grew by R30 million to R71 million in the previous financial year, the company said. The only remaining loss-making unit in the group, Denel Aerostructures, has improved its position by 35%.
Exports now contribute 50% of the group’s revenue, growing from R1 329 million to R1 783 million during the 2012/13 financial year, particularly within the company’s missile and landward defence businesses.
Some of Denel’s highlights over the last year include the redelivery of the eleventh and final upgraded Rooivalk combat helicopter to the South African Air Force in December 2012, the development of the A-Darter, the joint venture on guided weapons with Tawazun Holdings, the opening of the Russian Helicopters MRO facility, the awarding of the 200+ vehicle Badger contract, and supporting counter-rhino poaching operations.
Looking to the future, Denel hopes to fly its new Seeker 400 optionally armed unmanned aerial vehicle later this year and develop the Marlin family of missiles.