Denel now a far cry from the sorry state it once used to be
Order book at present stands at a record R35bn
DENEL, the state arms manufacturer, has reported strong improvement in profit in its latest financial year on the back of its export performance and forecast a positive outlook with an order book at R35 billion.
The company said in its annual report, tabled in Parliament yesterday, that it has been given a positive outlook by-ratings agency Fitch Ratings over its performance.
Denel, which was struggling in the past and sought state intervention in the form of loan guarantees, said its revenue grew by 28 percent to R5.8bn.
Its net profit rose by 72 percent from R194m to R270m. Denel’s revenue has increased over the last few years, with R3.9bn reported in 2013, R4.5bn in 2014 and R5.8bn in 2015.
The state arms manufacturer said its order book looked far better than any time in its history. In fact, it said the R35bn order book was triple the orders it received a few years ago.
The company has a range of contracts coming up and these contracts would have a good impact on their performance in the current financial year and the future.
It said it had a good track record in delivering on their contracts on time.
Denel would have to deliver heavy armoured fighting vehicles, air-to-air missiles, anti-armour missiles, light vehicles and other military equipments to its broad range of customers.
The order book had never looked so good in the history of Denel, it said in the report.
“Fitch Ratings re-affirmed Denel’s long-term rating at AAA and short-term rating F1+ with a stable outlook during the year,” it said.
It added that Fitch Ratings had based its outlook on Denel’s order book of R35bn and the company’s increased profits in the past five years.
“The agency further noted that Denel has managed to diversify its revenue base away from the SA defence sector with more than 50 percent of revenue now generated from exports, most notably to the Middle East and Southeast Asia,” said the annual report.
The ratings agency expected Denel to grow its defence export business.
This would help in increasing the revenue of the state arms manufacturer.
Denel said it was satisfied that it would continue to perform better in the coming years.
Its finances were in good condition and there was no serious question mark on its performance or business.
It would continue to stick to its good track record of delivering on time all the projects that were on order book.
This would be the key area where Denel would be able to increase its revenue, particularly with its export business.