State arms maker Denel is pursuing local and international defence contracts to convert a pipeline of more than R30bn in potential business into revenue, as cash shortages and continued operating losses weigh on its recovery.
Revenue rose 15.8% to R1.473bn in the year to March 2026, from R1.272bn a year earlier, according to its 2025/26 annual report. The group’s operating loss was R364m, little changed from R370m, and it received its ninth consecutive audit disclaimer, meaning auditors could not obtain enough evidence to form an opinion on its financial statements.
In a presentation to parliament’s defence and military veterans committee, Denel said its recovery depends on winning contracts, raising research and development spending and holding enough working capital. Its audit and risk committee warned that sustainability still rests on government support, delivery of the turnaround plan and turning prospective orders into cash.
Denel at a glance
| Measure | Figure |
| Revenue, 2015/16 | R8.8bn |
| Revenue, 2024/25 | R1.272bn |
| Revenue, 2025/26 | R1.473bn (+15.8%) |
| Operating loss, 2024/25 | R370m |
| Operating loss, 2025/26 | R364m |
| Opportunity pipeline | More than R30bn |
| Consecutive audit disclaimers | 9 |
Group chief executive Tsepo Monaheng told MPs the turnaround would be measured by delivery, financial management and the ability to turn opportunities into revenue and cash flow. Denel cited an Algerian contract for which guarantees are close to being issued, and an advance payment on a G6 artillery upgrade contract that is being held as collateral, with steps under way to release it.
Funding remains tight. Denel said banking relationships were being restored and that options include project finance from institutions such as the Industrial Development Corporation, bank facilities and possible support from its government shareholder. It reported a negative cash position in September 2026, and some legacy debt remains unpaid. It attributed the losses to a cost base above plan and to legacy contracts for which customers had paid, and the money had been spent, in earlier years.
The company is also adjusting to changing military requirements. It told MPs that geopolitical uncertainty was altering what its shareholder needs, noting that alliances can shift quickly, and that it was rebuilding technical skills and modernising products to keep pace with changes in warfare and technology. It plans closer work with the defence department, Armscor and the Council for Scientific and Industrial Research, and said a shared services model and smaller geographic footprint were cutting costs.
Denel’s decline has been steep. Revenue fell from R8.8bn in the 2016 financial year to about R1.4bn eight years later, and its order book peaked at R40bn in 2014. The Zondo commission found that state capture-linked deals cost the company up to R3bn in lost revenue. The government provided recapitalisations of R1.8bn in 2019/20 and R576m in 2020/21, followed by R2.9bn in 2021 to cover debt. In January, Denel had failed to pay workers despite a R2bn bailout.
Denel recorded a restated net profit of R193m in 2024/25, its first since 2016/17, even as it remained loss-making at operating level.