PMP still performing well in spite of 2012 profit drop


Ammunition manufacturer Pretoria Metal Pressings (PMP) has recorded a drop in profit for the 2012 financial year to R8 million, down from R14 million the previous year, but retains a strong order book with several large contracts in the pipeline.

PMP recorded a turnover of R499 million for the 2012 financial year ending March 31, down slightly from R501 for the previous year. Export turnover slipped by R11 million to R130 million, according to Denel’s Annual Report 2012. The confirmed order book for Pretoria Metal Pressings dropped to R254 million for the 2012 financial year, down from R361 million for 2011.

Denel said that, although the business environment continued to be tough due to the world economic climate and the Rand that is still strong against other currencies, PMP did well to maintain reasonable profits and positive cash generation for the 2012 financial year.

The company recorded several highlights in the 2012 financial year, including investing in new-technology manufacturing equipment, which reduced manufacturing costs. R18 million was spent on additions/replacements, and a state of-the-art modern primary explosive facility, which increases PMP’s ability to produce lead azide by 150% to more than five tons per month. The main customers for lead azide are Sasol and AEL, who use it for detonators in the mining industry.

PMP completed development of the Practice – Tracer (PRAC-T), Armour Piercing Capped Incendiary with Tracer (APCI-T) and Semi-Armour Piercing High Explosive Incendiary – Tracer (SAPHEI-T) versionfs of the 30 x 173 mm rounds for the Badger Infantry Combat Vehicle as part of Project Hoefyster. This year the company is focusing on developing a High Explosive Incendiary – Trace (HEI-T) round.
“The quality of this new product is among the best in the world – and comparable with any other international producer of 30 x 173 mm calibre rounds,” said Carel Wolhuter, CEO of PMP. “This strengthens the wide range of quality small- and medium calibre ammunition that PMP has been producing for more than 70 years.”

The 30 x 173 rounds will also be used on the Denel Land Systems GI-30 CamGuns supplied to Malaysia for its 8 x 8 Infantry Fighting Vehicles. Denel in July signed a contract to deliver turrets to Malaysia over a seven year period. Denel Land Systems will be responsible for supplying 69 x two man turrets fitted with the GI-30 30 mm main gun and 54 x missile turrets equipped with the GI-30 30mm gun and Denel Dynamics Ingwe anti-tank missile system.

PMP recently completed development of the 20 x 42 mm ammunition for the Neopup personal area weapon. The 20 x 42 mm cartridge was specially developed for the Neopup in order to decrease the size and weight of the weapon and deliver acceptable recoil.

PMP continues to hold its title as being amongst the top 5% of safest companies involved in dangerous goods in the world, totalling 2 458 702 accident-free hours as of March 19. Although employing 1 400 people on 2 000 production machines, PMP has a Lost Time Injury Frequency Ratio (LTIFR) score of 0.06.

PMP specialises in manufacturing small- and medium-calibre ammunition and technology-related products for military and commercial use. It also manufactures crew escape systems and power cartridges for local and international clients. The company supplies handgun and rifle ammunition to the commercial sector. It also provides the mining industry with drill bits and the electrical manufacturing sector with brass strip. These are commercial products that are derived from defence technology. Lead styphnate and lead azide are supplied to the chemical industry for the manufacture of detonators for the mining industry.

PMP’s main range of products include small-calibre ammunition ranging from 5.56 mm to 12.7 mm and medium-calibre ranges of ammunition from 20 mm to 35 mm and percussion caps of all types, as well as links for various small- and medium-calibre rounds.

PMP also produces power cartridges, rocket motors and canopy fragilisation systems for the safe ejection of pilots from aircraft; Probit rock drill bits for the mining industry and primary explosives and explosive products for commercial use in the private sector.

PMP’s non-ferrous foundry and rolling plant produces up to 80 tons of brass strip daily. A major portion is used for the manufacture of ammunition by PMP itself or by international clients procuring brass cups and discs from SA, with the remainder of the brass strip sold to the SA commercial market.

Most of Denel PMP’s products go to the South African National Defence Force (SANDF), South African Police Services (SAPS) and other local security agencies, but exports form an important part of the company’s business. For the 2011/2012 period PMP projected that 70% of its sales would come from South Africa.

Although the usage of small- and medium-calibre ammunition by the SANDF is estimated to be more than R200 million per year, sales to the SANDF were approximately R125 million in the 2012 year, emphasising the need for earlier planning, Denel said in its annual report.

Wolhuter earlier said that major uncertainties exist in the economies of most Western nations, causing disruptions that spill over into countries where the economies are fairly sound. He added that the economic recovery remains sluggish.

PMP is one of the large business entities in the Denel Group, and is internationally renowned for world-class military and commercial small and medium calibre ammunition. It exports 30 – 40% of its turnover and earns between R200 million and R300 million in foreign exchange annually for South Africa. The company produces between 80 and 100 million small arms rounds per year.