Rheinmetall Denel Munitions posts profit


Rheinmetall Denel Munitions (RDM) has posted a profit of R89 million before interest and tax, with R53 million cash on hand and a R2.2 billion order book. RDM is a strategic equity partnership (SEP) between state arsenal Denel, and Germany’s Rheinmetall Waffe Munition GmbH (RWM) and announced its results for the year to December 31 2009 this morning.

Denel Group CE Talib Sadik says the conclusion of the strategic equity partnership that resulted in RDM (49% of which is owned by Denel and 51% by RWM) in 2008 has seen the company’s profitable turnaround within its first full financial year. “The company has realised growth opportunities as a result of major export orders received,” he says.
“With a significant focus on aligning processes and reporting structures with those of RWM in order to achieve synergies, as well as an increase in its order book by using RWM’s international sales machinery, RDM has built up a record order book of R2.2 billion.” Sadik noted RWM’s worldwide marketing structure had enabled RDM to take full advantage of international selling opportunities in Europe, Asia and the Middle East (through an alliance with Burkan Munition Systems) all expressing increased interest in its local products.

The US and United Arab Emirates both contributed significantly to the orders received by RDM in FY2009 – “demonstrating how the SEP has effectively increased access to global supply chains and markets. This is in line with Denel’s turnaround strategy,” Sadik said. He adds RDM has commenced an investment programme of R300 million to modernise plant and equipment in order to achieve world-class standards, focus on improving quality and safety, as well as benefitting the environment.

RDM CE Norbert Schulze says RDM, which includes the former Naschem plant at Potchefstroom as well as Somchem and Swartklip in Somerset West, has benefitted from the implementation of select RWM management practices. “Reporting systems focused on key performance indicators have been introduced and are monitored regularly, enabling us to identify challenges and deal with these pre-emptively,” he said in a Denel media release. “Marketing efforts have also seen significant support from RWM to ensure that we achieve sufficient order cover for RDM,” Schulze says.
“Our current investment focus has been on investing in modern equipment. This will have a positive spin-off for our customers, ensuring quality and the prompt delivery of all products ordered from RDM,” he adds. The past year also saw R33 million invested in research and development (R&D) alone, “ensuring that the company’s competitiveness is further enhanced.”

Turning to black empowerment, Schulze said one of the primary objectives of the SEP was to enhance RDM’s local expertise. “Whilst truly demographic representation remains a challenge for the company, our skills development programmes are aimed at providing a meaningful solution and ensuring true empowerment.” RDM’s skills development programmes currently comprise legislative training, development of core skills (through learnerships, apprenticeships, and workplace experience) and internal bursaries (to the value of R4.5 million over the last financial year). They have collectively improved the company’s transformation profile, with 75% of training candidates being previously disadvantaged individuals.