Denel to expedite sale of non-core assets to revitalise its business

Embattled arms manufacturer Denel has unveiled plans to accelerate the sale of its non-core assets to revitalise the struggling entity.

This move comes as Denel seeks to inject much-needed capital into its operations and facilitate its resurgence in the defence industry.

Denel made the announcement recently when updating the portfolio committee on public enterprises on the progress of its turnaround plan.

The arms manufacturer’s turnaround strategy includes reducing its property holdings, particularly those that are non-strategic.

It plans to put rent some and sell others to generate additional income.

Denel’s interim group CEO Mike Kgobe highlighted the entities past achievements, including the production of armoured vehicles for the South African army and ongoing maintenance support for the air force and navy.  

Kgobe further talked about Denel’s progress in securing export opportunities, a crucial step in dealing with the company’s revenue challenges.

He reported that in 2016, Denel had a healthy order book of R23-billion, but it has since decreased to R8.7-billion in 2023.

Denel’s order book plunged further to R1.46-billion by March 2023. It also reduced its workforce from 5 000 employees in 2016 to 1 670.

To deal with these challenges, Denel said it has initiated restructuring efforts to correct the skills mix and to stabilise the organisation. It received R3.4-billion in recapitalisation funding from the National Treasury, with R1.8-billion already disbursed.

The committee heard that Denel is working on restoring relationships with associates and seeking partnerships in various countries to access global markets and technology development opportunities.

The committee’s chairperson Khaya Magaxa welcomed the briefing commending Denel for its commitment to adopting the committee’s recommendations.

He expressed optimism about the progress being made, highlighting the potential for the entity to diversify its offerings and contribute to the country’s economic growth.

“Denel possesses remarkable capabilities and infrastructure which can be leveraged for further diversification and improvement,” said Magaxa.

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