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Denel upbeat over improved results
Monday, 10 September, 2007
South Africa’s Denel Group (Stand 512) has reported significantly improved finances for the past year ended 31 March 2007, posting a reduction in net loss of 60 per cent to R549.1m (USD76m), on a 17.8 per cent increase in turnover to R3,268.1m.
Gross profit rose almost six-fold to R754.0m. The increase in turnover from the previous year is attributed mainly to progress on contracts such as the Umkhonto surface-to-air missile, Airbus A400M military transport aircraft, the AgustaWestland A109 light utility helicopter (LUH) and South Africa’s groundbased air defence system (GBADS). Incremental sales by Denel Land Systems and Denel Munitions to clients in South America, Europe and the Middle East also contributed to the group’s increased turnover.“We focused on revenue generation and cost control over the past 18 months,” said group CEO Shaun Liebenberg. “This led to the huge improvement in gross profit. Sales order cover increased from a base of 45 per cent last year to 75 per cent (as at April 2007) for the new year.”
At year-end Denel received a number of large contracts, notably the R8.3bn ‘Hoefyster’ — the
biggest in Denel’s 15-year existence, and the A-Darter air-to-air missile contract worth approximately R1bn.
Brazil is a joint industrial partner with South Africa on the A-Darter programme. Denel Land Systems, as the prime contractor on Hoefyster, has to deliver 264 units in five variants of the new-generation infantry combat vehicle to the South African Army.
Other noteworthy deals came to Denel Munitions and Denel Optronics. BAE Systems awarded Munitions a contract worth R300m over three years to supply brass cups, which are used in the manufacture of small calibre ammunition. Denel Optronics, in which German firm Carl Zeiss Optronics has acquired a 70 per cent majority holding and now trades as Carl Zeiss Optronics (Pty) Ltd, received a BAE Systems contract worth R200m to produce 450 units of its pilot helmet tracker system for use in the Eurofighter-Typhoon jet. “Some of the notable progress we have made is evident in the unbundling of the organisation and the establishment of independent operating businesses,” Liebenberg commented. “We received the necessary approvals to incorporate some of the businesses during the year, and this process will continue in the coming months.
“On all fronts of our macro strategy we’ve made solid progress: from engaging state agencies to partnering and introducing a commercial culture in the business,” he stated. “We further reduced staff numbers, invested in skills development, and with a view to improve financial integrity, we introduced high-level executive management and financial skills, along with outsourcing internal audit and taking a more robust approach to risk management.
“Last year I said the total re-engineering of Denel was well underway. Our results this year clearly show we are on the road to improved fortunes,” Liebenberg added. In his conclusion, he stressed that there were still many issues to be resolved. Liebenberg was confident that in the next 24 to 36 months, Denel would be in a sustainable position.
 Denel Land Systems is prime contractor on the R8.3bn Hoefyster contract — the biggest deal in the company’s 15-year history |