Denel CEO pins hopes on new operating model for loss-making turnaround

Denel CEO Tshepo Monaheng. Picture: Etienne Creux

Denel CEO Tshepo Monaheng. Picture: Etienne Creux

Published Mar 20, 2024


Denel’s new CEO Tshepo Monaheng is aiming to turn around the struggling state arms’ manufacturer with a new operating model to reflect proven proficiencies in the aerospace, guided weapons, landward and integrated systems (ISS) capability domains.

Monaheng, appointed CEO in December, has pledged better financial results ahead with the new operating model.

He said the parastatal needed to focus on its streamlined model, which emphasised operational cornerstones such as the Denel aerospace, the former Denel aeronautics and Denel Overberg test range (OTR); Denel guided-weapons, the former Denel dynamics; Denel landwards, a consolidation of Denel land systems (DLS), Denel PMP, Denel vehicle systems (DVS) OMC and mechatronic business units; as well as integrated system solutions (ISS).

Under the guidance of Mike Kgobe, the last acting CEO , Denel had exhibited global-leading products in missile technology, air defence systems, precision-guided munitions, artillery systems and unmanned aerial vehicle systems.

Denel is mulling interest in its artillery systems, air defence systems, guided weapons (missiles and precision-guided munitions) and unmanned aerial-vehicle systems.

Monaheng said there had been interest in Denel’s full-scale model of the Umkhonto-IR surface-to-air-missile, which has been deployed with success by several armed forces globally, including the SA Navy.

He said the parastatal was now on the hunt for a chief financial officer to develop a group finance strategy.

“The re-organisation would strengthen governance, which is crucial to the revitalisation of Denel’s vision as the credible state-owned strategic partner for innovative defence, security and related solutions across our markets, locally and globally,” Monaheng said.

The entity, consolidating its position from its Centurion and Ekurhuleni campuses as well as Tshwane in Gauteng and the Overberg and Bredasdorp in the Western Cape has also shortlisted some of its assets for sale to improve its cash flow.

He also said Denel sought market traction as Denel finished up its R3 billion endowment from the fiscus last year, which largely went to settling outstanding salary payments.

As at December 31, 2023, Denel’s realised net loss amounted to R463 million.

Since Danie du Toit exited the CEO suite in August, 2020, just short of two years in office, Denel has been under the stewardship of acting/interim CEOs including Talib Sadik, William Hlakoane and Kgobe. The interim CEO period also saw former CEO Riaz Saloojee’s return as chief restructuring officer in May, 2022.

Denel recently lost out on a R6bn missiles deal with Egypt after local banks turned them down for funding, despite the government providing bank guarantees to facilitate the deal.

Local banks cited ethical considerations in not financing the order.