Denel’s revenue rises, but lost expertise complicates recovery
PRETORIA — Denel has resumed recruiting technical staff after losing engineers, scientists, technologists and technicians, but financial pressures continue to complicate efforts to rebuild capabilities that support South Africa’s defence independence.
The state-owned arms manufacturer acknowledged the skills losses in its 2025/26 annual report, presented to Parliament’s Portfolio Committee on Defence and Military Veterans on Friday. Recruitment had restarted in several technical areas, although rebuilding the workforce remained underway, The Citizen reported.
Production has also resumed at Pretoria Metal Pressings, which manufactures short- and medium-calibre ammunition for the South African National Defence Force, the police and other customers. However, Denel recorded an operating loss of R364 million despite revenue reaching R1.473 billion.
Group chief executive Tsepo Monaheng acknowledged the remaining difficulties in a statement issued after the parliamentary presentation. He identified liquidity, financial controls and operational sustainability as continuing challenges, while maintaining that the company had made progress in stabilising its business.
Denel said revenue increased by 15.8% from R1.272 billion in the preceding year and that cash generated from operations had improved. It also reported a potential business pipeline exceeding R30 billion. Monaheng said recovery would depend on converting those opportunities into sustainable revenue and cash flows, supported by better delivery and financial management.
The financial difficulties remain substantial. According to The Citizen’s account of the annual report, Denel’s cash position turned negative in September, legacy debt had not been fully settled and management was considering cost reductions at its Dynamics and Landwards divisions. Persistent losses and deteriorating liquidity continued to put pressure on its ability to operate as a going concern.
Government has linked Denel’s sustainability directly to the military’s ability to maintain its equipment and operational readiness. In her May budget speech, Defence Minister Angie Motshekga described the company as a strategic sovereign defence capability. A new board, appointed in February for a term running to 2029, was tasked with providing leadership for its recovery.
That mandate covers a range of specialised technologies. At September’s Africa Aerospace and Defence exhibition, Denel showcased the Rooivalk attack helicopter, artillery and landward systems, missiles, unmanned aerial systems and ammunition capabilities, alongside expertise developed through its technical academy.
Monaheng said Denel’s priorities included executing existing programmes, strengthening internal controls, securing new business and investing in its people and technologies. The company’s own assessment makes clear that higher revenue and renewed recruitment are steps towards recovery, while sustained delivery and adequate cash remain essential to preserving those capabilities.
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