Peter La Franchi/PRETORIA
The South African Government says Denel is "on the brink" of securing a strategic investor - believed to be BAE Systems - after record sales in the last year and having cut its losses substantially. Denel plans to shed non-core operations as it continues to restructure, focusing on exports and maximising workshare from recent South African defence orders.
BAE expected to finalise the purchase of a minority stake before the end of its current financial year.
South African sources say Sir Charles Masefield, head of BAE's marketing arm, briefed Denel in August on how it might be supported in the global market. Masefield is a former head of the UK's Defence Export Services Organisation, a body intimately involved in the recent sale of Saab/BAE Gripen fighters and BAE Hawk trainers to Pretoria.
Further priorities include the divestment of non-core activities, and exploiting 1998's defence re-equipment packages, including the Gripen/Hawk deal. Together these are worth around R5 billion ($700 million) in sub-contracts to Denel over seven years.
Denel also hopes to "obtain orders for large systems". This is perhaps a reference to a possible order for artillery from Malaysia, which could in turn cast further doubts over plans to sell Rooivalk attack helicopters to Kuala Lumpur. A senior South African air force chief has warned that the Rooivalk production line could close in two years without new orders, and that it may be necessary to offer it simply as a helicopter, rather than a system, making it more saleable.
Denel had sales of R3.45 billion in 1999-2000, with after-tax losses of R206 million, down from the previous year's R745 million. Denel was last in the black in 1997, but hopes to break even in 2000-2001.
Minister for public enterprises Jeff Radebe says Denel's results show it has made "significant strides" in the last year. Exports reached a record R1.27 billion, up R.27 billion. Denel reports "significant gains" in the UK, with continued growth in Asia and steady sales in South America and the Middle East.
Source: Flight International
