Rising profits for Denel ammunition companies


The Denel Group’s ammunition manufacturing divisions Pretoria Metal Pressings and Rheinmetall Denel Munition both saw big increases in profitability in the last financial year, with 443% and 62% increases respectively.

PMP’s earnings were up substantially between the 2014 and 2015 financial years, with revenue rising from R515 million to R828 million, with the majority (74%) coming from the local market. Export revenue accounted for 26% of the total, and increased by 46% from R150 million to R219 million. Earnings before interest and taxation (EBIT) were up from R7 million in 2014 to R38 million in the 2015 financial year.

Some of the highlights mentioned by Denel in its annual report for PMP included delivery of the new 30×173 mm cannon round for the South African Army’s Badger infantry fighting vehicle, which mounts the 30 mm CamGun on the Section and Fire Support variants.

After completing the industrialisation of the 30x173mm PRAC-T rounds in 2014, the industrialisation of the APCI-T and SAPHEI-T rounds were completed in March 2015 with 15 000 APCI-T and 88 000 PRAC-T rounds being delivered to the South African National Defence Force.

The ammunition is interchangeable with the Mk 44 Bushmaster II and linked ammunition has already been fired successfully from this weapon. Denel said that good progress was made with the development of a hardened 30x173mm cartridge case for use in the Bushmaster while the qualification of the lapping process of the NAMMO (Sweden) 30x173mm APFDS-T projectiles is nearing completion.

Another highlight in the last financial year was PMP’s purchase of the full rights and intellectual property from NEOPUP for the 20x42mm personal area weapon (PAW) and production of the weapon. The Neopup is a semi-automatic weapon that fires bursting ammunition and can be comfortably fired by a single rifleman out to an effective range of up to 1 000 metres.

Meanwhile, Rheinmetall Denel Munition (RDM), of which Denel is a 49% shareholder, saw EBIT increase from R110 million to R178 million over the last two financial years while revenue went from R1.442 billion to R1.706 billion. Exports increased by 9%, from R897 million in 2014 to R1.204 billion in 2015.

Some of the highlights outlined in Denel’s annual report stated that Rheinmetall Denel Munition has a strong increase in booked orders with a current value of more than R3.1 billion (major booked multi-year projects from Singapore, Saudi Arabia and UAE), and that the company is financially sound, liquid and solvent with first dividend declaration to shareholders.

RDM laid a solid foundation for turnaround and sustainable growth and profitability and “remains the centre of excellence in Rheinmetall AG and Denel for all 60 mm, 81 mm and 120 mm mortar, as well as 155 mm artillery systems worldwide,” the annual report stated.

RDM specialises in the design, development and manufacture of large- and medium-calibre ammunition, and is a world leader in the field of artillery, mortar and infantry systems and plant engineering. Its business focus is on Asia, the Middle East, South America, South Africa, other African countries and Europe via Rheinmetall AG.

Its product portfolio includes large-calibre ammunition (76 mm to 155 mm), artillery projectiles, propellant, charges, pyrotechnic carriers, mortar bombs, 40 mm grenades and various missile subsystems. Plant engineering for various filling and lapping facilities is also part of its product portfolio.

Denel Dynamics, which produces tactical missiles and precision-guided weapons, saw revenue increase from R.1357 billion to R1.49 billion between 2014 and 2015, although EBIT fell 14% to R122 million. The current range of missile products and systems offered by the company includes the A-Darter 5th generation air-to-air missile, the Umkhonto-IR air defence missile, the Ingwe and Mokopa anti-armour missiles, Ingwe Portable Launch System, precision-guided munitions and the Raptor II stand-off weapon.

During the last year, Denel Dynamics successfully integrated the Umkhonto SAM on a navy vessel for an international customer (believed to be Algeria) resulting in early deliveries; and successfully cleared the Ingwe 5km missile on a light helicopter resulting in orders for a number of missiles (presumably from Iraq). Development of the long-range Al-Tariq guided bomb kit was completed with successful live firings and the first block of 250 production deliveries was finalised.

Al Tariq is being production in conjunction with UAE based Tawazun Dynamics (in which Denel has a 49% share). Tawazun Dynamics activated an initial six-year contract with a value of R5 billion to manufacture precision-guided munitions, the Denel annual report for 2015 noted.