Hit hard by cuts in defence spending, South African equipment manufacturer Denel is pursuing a long-term recovery plan focused on rationalisation and industry collaboration. Its appearance in the Top 100, albeit at number 100, suggests these measures are bearing fruit.
The state-owned company was created in April 1992 as part of a major defence industry restructuring. It inherited most of the manufacturing and research facilities of the Armaments Development and Production Corporation. It also inherited the South African National Defence Force as a major customer. However, a less fortunate inheritance lay in what former chief executive Shaun Liebenberg has termed "a subsidy culture". Efforts to transform this into a "commercial" culture are ongoing.
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Denel's strategy is built around five pillars: to secure privileged access to a minimum portion of South Africa's defence spend to partner state agencies on business planning and export marketing to grow viable businesses based on technological leadership to secure equity business partnerships with global players and to raise capabilities and productivity to "world-class levels".
Standalone business units include MRO facility Denel Aviation Denel Saab Aerostructures missile manufacturer Denel Dynamics Defence Land Systems Denel Munitions and Mechem, which provides landmine removal and contraband detection services.
In 2001 a 51% stake in Denel's aeroengines business was sold to Safran. A subsequent collaboration drive saw Denel sell a 40% stake in its unmanned air vehicle business to Advanced Technologies & Engineering, a 51% stake in Denel Munitions to Rheinmetall Defence and a 70% stake in its optronics business to Carl Zeiss. The aerostructures business rebranded after Saab took a 20% stake.
Aeroengines apart, these divestments were led by Liebenberg, who on 1 July became Rheinmetall Defence's head of international business development. Having cut losses by more than 60% between fiscal year 2006 and FY2007, he leaves new chief executive Talib Sadik with a tough act to follow.
Source: Flight International
