Successful strategy leads to Denel turnaround

[noost]

http://www.fin24.com/Companies/Indus...round-20141029

Successful strategy leads to Denel turnaround

Cape Town - State-owned arms manufacturer Denel reported to MPs on the public enterprises committee on Wednesday that it has made a huge turnaround in the last eight years.

Group CEO Riaz Saloojee told the multi-party committee that "right now we are a good company... we are performing well". He predicted that with the process of change, the company would be able to lay claim to being "a great organisation... reflective of the real spirit of our country".

An example of its indigenous expertise is the Rooivalk attack helicopter, a wholly South African-designed product which was used by United Nations forces in the Congo, Saloojee said.

Revenue improved by 17% to R4.58bn in the 2013 to 2014 financial year. Domestic revenue was R2.3bn, while export revenue rose 28% to R2.27bn, roughly half of total revenue.

Operating profit of R224m represented a 91% improvement, according to chief finance officer Fikile Mhlontlo. Operating profit was R117m in 2013.

The CFO said financials were looking gloomy in the 2005 to 2006 financial year, when Denel was "seriously loss-making". It lost about R1.5bn in that year.

Successful turnaround strategy

Over the last four years it has turned a profit. This was achieved by a turnaround strategy which focused on revenue improvement, managing down costs and managing debt as well as the cash resources of the organisation, he said.

At a time when other companies and entities were being downgraded, Fitch had upgraded Denel, he reported.

Saloojee reported that Denel is developing a maritime capability, not to build ships but to supply items such as weapons systems.

He said the order book is currently R32bn - "the highest order cover in Denel's history".

Revenue was up to R4.58bn from R3.9bn in 2013. Gross profit was R899m, up from R826m in 2013. Net profit rose from R71m in 2013 to R194m in 2014.

[noost]

Good news overall,

Curious to know from what they are generating revenue?

[Klasnikov]

Good news overall,

Curious to know from what they are generating revenue?

Weapon and other related hardware sales. Ammo and related components sales. They are pretty diverse in terms of products on offer. Good to see some sales of the rooivalk after all the years it was stuck in development.

[Pirate]

Weapon and other related hardware sales. Ammo and related components sales. They are pretty diverse in terms of products on offer. Good to see some sales of the rooivalk after all the years it was stuck in development.

Methinks NOT pouring money into Rooivalk development has a huge positive influence on their cashflow. And AFAIK they didn't get foreign sales for Rooivalk, the ones operating on UN campaigns are SAAF aircraft from 16 Sqdn

:- P

[Klasnikov]

+1

[Psychosis]

Good news overall,

Curious to know from what they are generating revenue?

All of us plebs buying primers and powders? LOL.

[HvR]

Methinks NOT pouring money into Rooivalk development has a huge positive influence on their cashflow. And AFAIK they didn't get foreign sales for Rooivalk, the ones operating on UN campaigns are SAAF aircraft from 16 Sqdn

:- P

Also thinking that AFAIK they've always been making money from the simpler things like ammo, simpler weapon systems, smaller ground vehicles and wasting it on the complex weapon systems and platform development that are too expensive too compete with the Russian/Chinese system and not technologically advance enough to compete with the US.

Seem that somebody eventually realized it and shifted to markets they can actually be competitive in.

[Piet vWdVries]

Well, if the CEO of a state owned company says it , it must all be true.

Right?

[Andycap]

All of us plebs buying primers and powders? LOL.

Erm, does anyone locally support them?

They dont support us with reasonable prices.