State-owned defence firm Denel has reportedly posted a R1.7 billion loss for the 2019/20 financial year.
Citing a presentation by the Department of Public Enterprises to parliament on Wednesday, Reuters reported that the loss has been attributed to a significant decline in revenue.
In the 2018/19 financial year, Denel reported a R1.75 billion loss, off revenue of R3.8 billion. In the prior year, the group’s loss came to R1.05 billion – bringing the three year total to R4.5 billion.
The group’s financials for the year ended March 2020 have been delayed, and are set to be finalised by the end of October.
Denel has faced severe financial strain for the last few years, and is on a list of many other state-owned enterprises which have faced collapse, including South African Airways – which is set to be restructured into a new state airline – and Eskom, which is struggling to pay off debt exceeding R450 billion.
Denel, which makes equipment from armoured vehicles to missiles for the South African armed forces and clients around the world, has had its liquidity crisis aggravated by the Covid-19 pandemic.
The group has reportedly struggled to pay salaries and has appealed to the government to allow it to use its R1.8 bailout funds for operational costs and not just debt servicing. However, the terms of the bailout are set until at least the mid-term budget speech in October.
Leadership changes have also dealt a blow to the group, after former chief executive, Danie du Toit, resigned from his position in July, having served less than two years at the company.
Du Toit was tasked with overseeing a turnaround strategy at the defence group, and despite support for his plans from government, funding for these plans proved to be the ultimate hurdle, analysts said.