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Denel's turnaround strategy paying off

By Marcia Klein | Aug 20, 2009 | COMMENTS [ 0 ]

DENEL, the state-owned defence and aerospace company, continues to make progress with its turnaround and nine of its 11 businesses are now out of the woods.

But its financial results remain under pressure as it is still not adequately capitalised.

Chief executive Talib Sadik said Denel's normalised loss for the year to March was R242million, against R307million the previous year.

But the net loss of R544million, which has widened since last year's R347million, reflects some once-off restructuring items, an impairment charge of R172million in the aerostructures business and interest charges. Last year's results were also positively affected by the sale and leaseback of some land to Acsa.

While it has largely turned around, Denel's major challenge remains trying to increase revenue, as its development costs, and interest on its debt, are large.

Research and development costs of R1,2billion, up from R800million in the previous year, account for more than 20percent of total revenue.

Sadik said there were plans to turn around the two remaining underperforming businesses - aerostructures and missiles.


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