Pretoria - State-owned arms manufacturer Denel's
revenue-generating ability is improving, Public Enterprises Minister
Malusi Gigaba said on Thursday.
The company posted a modest profit of R41m for
the financial year ending March 2012, he told reporters in Centurion
after meeting the Denel board.
"This company is in a turnaround process and we are
encouraged with the progress made so far. I am happy with the company's
performance at this stage, though there is still a lot of work to be
Despite the positive financial results, Gigaba said the
government was considering giving the parastatal further financial
"As the shareholder, we are committed to the turnaround
of Denel. We are looking at mechanisms that make it possible for Denel
to attain its goals," he said.
"The allocated R700m recap will relieve some of
Denel's solvency and liquidity [issues] and pressures in the short term.
Additional support, post that, is being considered carefully."
Gigaba said he had instructed the parastatal's board to explore ways to expand into the African market.
"Denel must position itself to penetrate the African
market. We will be looking to other sectoral departments like defence
and international relations to leverage Denel's capabilities in that
target market," he said.
"That calls for strong and active shareholder support
to facilitate government-to-government relations to overcome challenges
in acquiring orders."
Gigaba said arms manufacturers across the world were
suffering because of a general decline in military expenditures in
Europe and North America.
"It is anticipated that we are going to be in this
situation in the foreseeable future. That decline is, however,
counter-balanced by rising military expenditure in China, India and the
To that effect, Gigaba said Denel needed to divert its focus towards African and eastern markets.
Denel board chairman Zoli Kunene said the company was being re-structured to align its operations to the changing export market.
"We are quite happy as the board. The new chief
executive [Riaz Salojee] has presented his transformation plans to the
board. We think that we will be able to retain another positive profit
next year," said Kunene.
The Denel Group and its associates employ over 6700
people. The company is one of the major arms suppliers for South
Africa's defence department.
According to a statement from the company, in the
2011/12 financial year it secured approximately R5bn in export
orders, which would be executed over the next five to seven years.