The company said the deal was the largest export contract by value in its history and would result in a significant cash injection and job creation in the local industry.
The deal will see Denel subsidiary Denel Land Systems supply a range of turret and integrated weapon systems to be fitted onto armoured vehicles. The turrets will be exported to Malaysia over a seven year period, with the first consignment ready for delivery in January next year.
The contract which significantly ups Denel’s order book brings some financial stability to the company, which despite reporting a profit last year due to gains on the restructuring of its pension fund, posted an operating loss of R314m.
The news also comes a day after its subsidiary Denel Aerostructures announced that it was on the verge of securing a new long-term deal with aircraft manufacturer Airbus to supply parts for its state-of-the-art A400M military carrier.
CEO of Denel Land Systems (DLS) Stephan Burger said the contract was a huge boost for the manufacturer.
“The contract will lead to the creation of about 400 jobs in the industry. It means that R3.5bn will flow into the economy and is vital for Denel to operate profitably.”
He said jobs would fall to graduates, skilled artisans and the more than half to indirect and semi-skilled workers.
DLS’s primary focus is to provide products to the SA National Defence Force but it also serves international markets.
“We have the SANDF as our base load and winning a contract of this size on top of this will go a long way to ensuring profitability,” said Burger.
He said DLS would supply a number of strategic components that had been designed and developed at its campus in Lyttelton, Pretoria.
“These systems are cutting edge technology and places us at the forefront of capability,” said Burger.
He said the agreement provided a platform to transfer weapon system integration technology to Malaysia and would facilitate future cooperation between the two countries.
“To win this we had to be technically and commercially on top of our game. Nothing brings success like success. We see this as the beginning of turning the tide on our export contracts,” he said.
Riaz Saloojee, the group chief executive said the contract entrenched Denel as a global player and would lead to a growing interest from the international community.