Denel moves to be more sustainable

Jun 05 2013 15:09

Pretoria - State-owned aerospace and defence technology company Denel is diversifying its services to reduce its dependency on government funding, the company said on Tuesday.

"We are not [just] in the business of selling products. The partnerships that we are involved in, for example with Brazil [and the] United Arab Emirates, are testament that these business relations will be based on something more fundamentally sustainable than selling products," Denel CEO Riaz Saloojee told reporters at a briefing in Irene (south of Pretoria).

The company was reducing its dependency on government funding.

"We don’t want to continue to be a burden on the South African taxpayer. But the fact of the matter is that there are certain strategic capabilities that will have to be funded," he said.

Saloojee would not elaborate on these capabilities, saying it was between the company and the defence department.

"That will be in the public domain when we agree on what are those capabilities," he said.

The briefing was meant to give an overview of Denel's growth, after the company made marginal profits in the past few years.

Saloojee attributed previous low profit margins to slow global economic growth and government’s policy on defence spending.

Historically, Denel had sold products and there was a lack of understanding or commitment to life cycle support and ensuring skills support.

The company was taking a new direction, he said.

An engineering bursary scheme and a Denel academy had been established for internship programmes and producing artisans and technicians.

In the current financial year, Denel had invested R530m in research and development. Through its high-tech manufacturing section, Denel brought in excess of R1.7bn into the South African economy.

Saloojee said Denel had also gone beyond providing the SA National Defence Force with technology, and now used its unmanned aerial vehicle systems (UAVS) for border control, detecting veld fires and fighting rhino poaching.

Regarding the latter, UAVS flew above national parks and had the capacity to take video footage and relay information in real time to law enforcement officials on the ground.

Saloojee said Denel had opened a centre of excellence during the Brics (Brazil, Russia, India, China and SA) summit earlier in the year.

The centre performed maintenance, repair and overhaul services on both military and civilian helicopters manufactured by Russian Helicopters.

"Our strategy is to grow the company’s revenue through diversification, exporting to new markets, and entering into new partnerships - both locally and overseas", he said.

The Middle East, Africa, South America and the Asia-Pacific regions had been identified as strategic markets for the company.

An order book of R21bn had been confirmed over the next three to eight years, Saloojee said.

Denel was currently finalising a contract to produce 264 infantry combat vehicles.

The company was also involved in the design and development of a complex missile system in partnership with Brazil and Abu Dhabi.

Saloojee also announced that a Seeker 400 UAVS would soon undergo its final testing phase.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.




Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about: STEINHOFF

Steinhoff International, once the darling of fund managers, risks falling out of the JSE top 100.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

If SARB keeps interest rates the same this afternoon, how will this affect your personal finances?

Previous results · Suggest a vote