Defence parastatal Denel reduced its net loss from R1,363-billion to R549,1-million for the year to the end of March — a 60% improvement.
This was achieved on the back of a 17,8% growth in revenue from R2,773-billion to R3,268-billion.
Gross profit for the 12 months rose to R754-million — a 675% improvement on the previous year’s profit of R131,1-million.
The R495-million increase in turnover from the previous year was attributed mainly to progress on contracts like the Umkhonto surface-to-air missile, Airbus A400M military transport aircraft, the Agusta A109 light utility helicopter (LUH) and South Africa’s ground-based air defence system (GBADS).
Incremental sales by Denel Land Systems and Denel Munitions to clients in South America, Europe and the Middle East added to the increased turnover.
“We focused on revenue generation and cost control over the past 18 months,” said Denel CEO Shaun Liebenberg.
“This led to the huge improvement in gross profit. Sales order cover increased from a base of 45% last year to 75% [as at April 2007] for the new year.”
At year-end Denel received a number of large contracts, notably the R8,3-billion Hoefyster infantry combat vehicle — the biggest in Denel’s 15-year existence — and the A-Darter air-to-air missile contract worth approximately R1-billion.
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 vehicles to the South African National Defence Force (SANDF).
Other noteworthy deals came to Denel Munitions and Denel Optronics. BAE Systems awarded Denel Munitions a contract worth R300-million 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 majority holding, received a BAE Systems contract worth R200-million to produce 450 units of its unique pilot helmet tracker system for use in the Eurofighter-Typhoon jet.
“The year was certainly not short on achievements for Denel’s businesses,” Liebenberg said.
“Eurocopter certified Denel Aviation as an accredited maintenance, repair and overhaul facility for the Oryx helicopter, and Lockheed Martin completed an audit there to certify it as a fully accredited Hercules C-130 facility.”
Besides the Hoefyster contract, Denel Land Systems also received a contract from Armscor for the SANF’s 60mm long-range integrated mortar system and for upgrading of the SANDF’s Rooikat infantry combat vehicle and G5/G6 guns.
Denel Saab Aerostructures delivered top shells for the Airbus A400M military transport aircraft, which is due for its first flight in 2008, and received further business from Airbus Germany to supply 188 sets of ribs, spars and sword (the internal structure of the aircraft’s vertical tail).
It also completed several Agusta A109LUH helicopters.
“Fact is, I’m proud that most of Denel’s businesses could report successes, like Denel Dynamics that not only concluded the bi-national A-Darter contract with Brazil this year, but also signed the first UAV [unmanned aerial vehicle] business with that country,” Liebenberg said.
“They also commissioned the Umkhonto surface-to-air missile in Finland by doing a very successful flight test in the Baltic Sea.”
Denel Munitions completed development of the 30mm Aden ammunition for the Hawk fighter-trainer aircraft, which has significant benefits over the competitor product and resulted in the company getting a large international order for 150 000 Aden rounds.
“Some of the notable progress we have made is evident in the unbundling of the organisation and the establishment of independent operating businesses,” Liebenberg said.
“We received the necessary approvals to incorporate some of the businesses during the year, and this process will continue in the coming months.”
The agreement signed with Saab in Sweden in June 2006 regarding the establishment of a new aerostructures company, led to Saab AB taking an initial minority equity stake and operational management control, with Denel retaining an 80% holding. This business was fully incorporated and started operating as Denel Saab Aerostructures with effect from February 1 2007.
At the close of the financial year Denel and German company Carl Zeiss Optronics agreed on an equity partnership for Denel Optronics. Denel was to retain a minority share with Carl Zeiss Optronics taking a majority holding of 70%. The effective transaction date was after year-end, with final share transfer on July 20 2007.
The company now trades as Carl Zeiss Optronics.
Negotiations with other local and international defence companies are still under way to conclude partnerships for some of Denel’s other businesses in the near future.
“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,” Liebenberg said. – I-Net Bridge