President Cyril Ramaphosa this week undertook a guided tour of Denel facilities in Johannesburg and Tshwane, ahead of the Africa Aerospace and Defence (AAD) 2026 Expo.
“The President’s visit to Denel’s operations in the City of Johannesburg and Tshwane follows a commitment he made during his visit to the Denel stand at the 2024 Africa Aerospace and Defence (AAD) show to visit the company’s operations.
“The visit…provides an opportunity to assess Denel Aerospace’s capabilities and contribution to South Africa’s defence industry and national security,” the Presidency said in a social media post on X, on Wednesday.
The President toured the facilities alongside Defence and Military Veterans Minister Angie Motshekga. The visit comes as the state-owned defence equipment manufacturer has faced challenges. However, with a turnaround strategy in place, Denel is turning a corner.
Denel's 2025/2026 financial results reported a 15% increase in revenue to R1.473 billion, up from R1.272 billion the previous year. The company also recorded its second consecutive annual profit, though net profit fell to R156 million from R193 million in 2024/2025.
The company’s R2 billion G6 howitzer upgrade contract for Oman is emerging as the clearest evidence that the state-owned defence manufacturer can still compete on the international stage.
The G6 contract, worth USD105.9 million, has seen every scheduled milestone met on time since May 2025. Design reviews have been signed off, technical training delivered, facility construction is underway in the customer country, and hardware testing has been cleared on schedule.
However, a R350 million in advance payment is locked up as collateral by the guarantee-issuing bank. However, Denel is working on alternative financing.
Facts and figures
As the company continues on its turnaround plan, the figures show that:
• Revenue stands at R1.473 million in 2025/2026, up 15% from R1,272 million the year before.
• Net profit: R156 million in 202520/26, down from R193 million the year before. Most of this came from investment income (R716m), not operations.
• Operating cost margin improved to 60% from 74.5% two years ago, but costs are projected to rise again to R912 million.
• Cash fell from R3.77 billion in 2023 to R783 million in 2025.
• Denel needs R4 billion in revenue to sustain its current costs, against the R1.4 billion achieved.
• R3.4 billion was received from National Treasury and R992 million from the Denel Medical Benefit Trust; most of this has already been spent on legacy debt.
• Furthermore, government guarantees have been ring-fenced and no executive bonuses paid since 2022.
A new broom
In a statement announcing Denel’s new board earlier this year, Minister Motshekga expressed confidence in a new era for the company.
“The incoming Board brings a wealth of experience across governance, defence, finance, engineering and executive leadership. We have full confidence in the capability of the new Board to strengthen governance, restore operational performance, rebuild stakeholder confidence and guide Denel towards long-term sustainability”.
“We look forward to working closely with the new Denel Board as it undertakes the task of being an innovative, ethical and commercially viable entity with a sustained ability to deliver world-class products across the spectrum of aerospace, defence-related technologies from land to sea, to airspace, cyber, space and security environments,” Motshekga said.
Following the appointment of the new board, the board set out success factors vital to the company’s future sustainability.
These include:
• Building a healthy order book by securing contracts from both local and international clients.
• Prioritising support to the South African National Defence Force (SANDF).
• Ensuring that adequate working capital is available to support future growth, including the re-engineering of cash flow and the management of working capital.
• The establishment of pillars that strengthen ethical leadership and embed a robust governance culture which will permeate through the entire value chain.
• Upgrading Denel’s information and communication technology (ICT) infrastructure and strengthening controls to deliver accurate and credible financial statements.
“The Board and management introduced a robust remedial plan, which includes the re-establishment of strong internal control governance structures that drive implementation of the plan.
“Denel also introduced a wide-ranging fraud and corruption prevention strategy which meets international standards, including lifestyle audits for staff, senior management and executives.
“Denel’s vital role in the safeguarding of South Africa’s sovereign defence capabilities cannot be overstated. It remains a cornerstone of national security, providing the country with control over advanced technologies, systems and platforms necessary for operational readiness and strategic independence,” the company said in a statement. – SAnews.gov.za
