Ramaphosa tours Denel facilities ahead of AAD 2026 as turnaround gathers pace

President Cyril Ramaphosa this week toured Denel's facilities in Johannesburg and Tshwane, alongside Defence and Military Veterans Minister Angie Motshekga, ahead of the Africa Aerospace and Defence (AAD) 2026 Expo.

The Presidency said the visit fulfilled a commitment Ramaphosa made at the 2024 AAD show and gave him the opportunity to assess Denel Aerospace's capabilities and its contribution to South Africa's defence industry and national security.

The visit comes as the state-owned defence manufacturer, having weathered years of financial difficulty, shows signs of a turnaround. Denel's 2025/26 financial results show revenue up 15% to R1.473 billion, from R1.272 billion the previous year, marking a second consecutive annual profit – though net profit fell to R156 million from R193 million, with most of that figure coming from investment income rather than operations.

The clearest sign of Denel's ability to compete internationally is its R2 billion (US$105.9 million) contract to upgrade G6 howitzers for Oman, on which every milestone has been met on schedule since May 2025, including design reviews, technical training, facility construction in-country, and hardware testing. An advance payment of R350 million remains locked up as collateral by the guarantee-issuing bank, though Denel is pursuing alternative financing.

Other figures underline the scale of the turnaround still required: Denel's operating cost margin has improved to 60% from 74.5% two years ago, though costs are projected to rise again to R912 million, while cash reserves have fallen from R3.77 billion in 2023 to R783 million in 2025.

The company estimates it needs R4 billion in revenue to sustain current costs, against R1.4 billion currently achieved. It has received R3.4 billion from National Treasury and R992 million from the Denel Medical Benefit Trust, most of which has already gone towards legacy debt; government guarantees have been ring-fenced, and no executive bonuses have been paid since 2022.