Denel Dynamics poised for growth


Missiles and aerospace house Denel Dynamics plans to nearly double is revenue over the next five years to nearly R2 billion and will do so in part by investing in new products and growing skills.

Denel Dynamics is hoping to achieve revenue of R1.8 billion for 2019 and R152 million in earnings before interest and tax (EBIT), compared to revenue of R999 million in 2013 and EBIT of R21 million (EBIT for 2012 was R40 million, according to Denel’s 2013 annual report). Speaking at Denel Dynamics’ recent Show and Tell, Dynamics CEO Tsepo Monaheng estimated that Denel Dynamics would grow by an average 12% year-on-year in the next five years.

The company also seeks to grow the number of employees from 872 to 942 and increase investment in skills development by 50%. Monaheng said growing skills is a big challenge – one strategy is to design a Specialised Technical Training (STT) program for employees under age of 35. Monaheng said that there is a crisis situation regarding skilled employment, especially of young people.

He also cautioned that the competition is aggressive as major manufacturers in the industry are moving into Denel’s traditional markets as their home markets dry up. He said that South Africa is looking up to Denel Dynamics to deliver on hi-tech systems and solutions. “South Africa should be the country of choice to partner and do business with, the continent is looking up to us for solutions,” he said, adding that Denel Dynamics has to not only continue to develop products for the South African National Defence Force (SANDF) but also position to compete in the international market.

Developing products for the SANDF is especially important in light of the Defence Review, which expects Denel to be responsible for sovereign capabilities such as commander and control.

Part of Denel Dynamics’ strategy going forward is to keep developing new technology and focus on research and development. Christo de Kock, Chief Operations Executive at Denel Dynamics, said it was necessary to evolve and change especially in light of the fact that six out of the ten major conflict areas in the world are in Africa.

He noted that conflicts are starting more quickly and lasting longer and that warfare is changing and becoming increasingly asymmetric. Cities are more frequently becoming battlegrounds while the nature of warfare is changing – for instance cyber warfare and economic warfare are on the rise while organised crime syndicates and cartels are having a destabilising effect on certain countries – the Mexican drug cartels are a good example.

As a result of these changes, certain requirements are emerging for things like unmanned aerial vehicles, unmanned ground vehicles, unmanned marine systems, static observation sensors, precision weapons, man-portable weapons, weapons with targeted warheads and precision target marking and engagement, de Kock said.

On the protection side, de Kock said that vehicles, bunkers, assets, convoys etc. require protection, both active and passive, such as counter-artillery, rocket and mortar munitions and IED jammers. Another requirement he identified was the need for stealth, particularly a stealth anti-tank missile to defeat countermeasures systems as well an infrared stealth for vehicles.

Denel Dynamics is delving into all these areas (unmanned systems, space, sensors, stealth, and precision weapons) through various projects, many of which are funded by Armscor and the Department of Defence.

De Kock said that it is important to establish a research facility to look at future needs and solutions and that Denel Dynamics will do that and prioritise effort based on the SANDF’s needs.