Cape Town - State-owned arms manufacturer Denel significantly boosted its net profit to R194 million on the back of a long-term turnaround strategy, its 2013/14 financial results revealed on Friday.
The group's net profit improved by 63 percent and its revenue grew by 17 percent to R4.58 billion, mostly attributable to a surge in exports.
Half of Denel's revenue was made up of developing and producing missiles and other defence items for export to regions such as the Middle East and Asia.
It had attained its largest-ever multi-year order book at R32 billion to be executed over the next 10 years.
“We can safely state that Denel has now returned to profitability on a sustainable basis,” group chief executive Riaz Saloojee said in a statement.
“We have achieved the envisaged turnaround and are well on our way to move the company from being a good to a great company - in the process meeting shareholder expectations and transforming Denel into a valuable and self-supporting national asset.”
Denel's debt to equity ratio had gone from 2.8:1 in 2012 to 1.1:1 this year.
Fitch Ratings recently upgraded Denel's rating to “AAA” in recognition of its improved financial performance.
Saloojee said Denel was expanding from being a primarily defence company to a broader technology clearing-house as its future growth was dependent on remaining competitive.
In the short-to-medium term, it would further diversify into civil security and command and control.
Systems integration in the maritime industry was a future possibility.
Saloojee said increased co-operation with departments and state bodies was important.
“We have already seen this approach in practice with the recent contract awarded to Denel Aviation to deliver helicopter services and maintenance work to the Transnet National Ports Authority,” he said.
Denel also intended becoming involved in the revitalisation of rolling stock belonging to the Passenger Rail Agency of SA.
Public Enterprises Minister Lynne Brown congratulated Denel on Friday for its performance despite constrained defence budgets around the world.
“We are not celebrating yet as a lot of work still needs to be done,” she said.
“I have reminded the board that the business is still work in progress. The balance sheet is still supported by the R1.85bn government guarantee and thus the company needs to wean itself off government support.”
Brown said she had raised the issue of workforce transformation with the Denel board as a matter of urgency.
The company needed to make sure it did not have a skills gap brought about by retirements.
Gender equality was also imperative.
“The current status quo of a 78 percent male versus 22 percent female staff complement is a cause for concern,” she said.
The board was instructed to report back to her on its progress in these areas by the next annual general meeting. - Sapa