Defence company Reunert’s Applied Electronics segment is being repositioned as a global integrated-solutions platform by 2030, with the business targeting revenue growth and a long-term project pipeline of over R36-billion anticipated to be capitalised on.

The segment is aiming to capture the demand surge in the defence supercycle, with the division built to convert structural demand into high-margin growth, leveraging the correct positioning to tackle global demand, the correct capability to address regional threats and the correct model to win in export markets.

This was outlined at Reunert’s first Capital Markets Day dedicated to its Reunert Applied Electronics segment, which designs, produces and sells products and solutions for the defence industry and for dedicated mining and rail applications.

The segment’s ambition is being pursued through a potential three times revenue multiplier and strengthened capabilities.

Reunert has identified constraints that need to be unlocked to enable it to deliver on this goal.

Disciplined investments across the value chain and an evolution of the company’s past operating model are expected to underpin this transformation.

The newly built strong pipeline aims to support an accelerated backlog conversion and provide confidence on long-term growth, with the segment shifting its perspective to the latter from short-term performance.

This is underpinned by a stronger backlog and pipeline visibility, addressing the businesses’ historical cyclicality.

This foundation for growth is indicated to already be implemented, tested and delivering, with strong growth over the last cycle building up the capabilities required to move forward.

Over the last cycle, the division operated with a federated model with shared principals and objectives at segment level.

Its strategy entailed internationalisation, product bundling and portfolio efficiency.

Reunert achieved revenue of R13.9-billion for the 2025 financial year, with a solid balance sheet and three diversified segments.  

The newly defined full potential plan for Reunert Applied Electronics will rely on five key levers of growth, namely strongholds consolidation, new market expansion, offering expansion, additional upside and inorganic strategy.

Reunert Applied Electronics is posited to be in an over-ten-year tailwind, not a cyclical spike. Demand is evidenced by empty stockpiles, funded by treaties and extended by platform cycles.

The division sits at the intersection of three independent global forces, pushing defence demand structurally higher.

Three global supercycles – the energy transition, AI and digitalisation and defence – are reshaping global demand and creating new structural opportunities, the combination of which underwrite the group’s next decade.

In defence, there is structural demand, with treaty-level commitments locking in budgets for a decade. There is also a capabilities shift, with the changing conflicts shifting value into the electronics layer. Further, there is safety and security, with new threats accelerating spending for critical infrastructure protection.

In terms of the shift in the approach to electronics capability, the electronics layer's impact is reliant, hardened systems; short lead time and low-cost products at scale; networked sensors and data fusion for any-sensor-to-any-shooter; open, upgradable architectures that bolt-on new capability fast; and scalable production and local content over custom-made one-offs. 

In terms of safety and security, defence is becoming a whole-of-society effort, opening an electronic-layer market beyond traditional weapons.

The electronics layer impact is wide-area surveillance and sending to detect and deter physical attacks, resilient and redundant control systems that keep operating when grids are hit, secure communications and encryption protecting data and a command links, and electronic warfare and network defence against jamming, spoofing or intrusion.

A durable defence super cycle is said to be reshaping industry dynamics across geographies and the division is poised to capture it. Firstly, the peace dividend now over, and security top of the global agenda, driven by structural demand and a new approach to warfare.

Secondly, regional trends and threats are expected to shape spending and fundings across markets.

Lastly, there is a long-awaited opportunity to revive South Africa’s defence industry, with support also expressed in this regard of late from government and industry events.

The country’s defence industry is self-controlled, open to co-development and boasts world-class engineering and, therefore, the strategic levers of location, co-ownership of intellectual property and capabilities consolidation can be pulled to rebound the industry.