South32’s full-year earnings jump 41% on aluminum, alumina

South32 Ltd., the miner spun out of BHP Billiton Ltd. in May, said full-year earnings rose 41 percent helped by its aluminum and alumina operations. Underlying earnings were $575 million in the year ended June 30, compared to a proforma $407 million a year earlier, the Perth-based miner said in a statement.

South32, the world’s biggest manganese ore producer, had record output of alumina in Brazil, metallurgical coal and manganese alloy in Australia and manganese ore from South Africa. A cost-cutting program also boosted earnings, it said. The company will seek to reduce costs by at least $350 million a year for the next three years, and is continuing a review of South Africa manganese operations that may lead to a further reduction in planned production, it said.

The producer declined 3.6 percent to $1.465 at 10:30 a.m. in Sydney, to the lowest since it began trading in May.

The company's profits are being shielded from the full sting of faltering demand in China that’s eroding earnings for its competitors. The world’s biggest buyer of metals accounts for about 11 percent of its sales, while BHP and Rio Tinto Group rely on the nation for about a third of their revenue. Rio’s first-half underlying profit plunged 43 percent.

“Broader cost saving initiatives are already delivering strong results,” Chief Executive Officer Graham Kerr said in the statement.

X2 Resources, led by former Xstrata Plc Chief Executive Officer Mick Davis, is weighing an eventual bid for South32 and offered BHP about $10 billion for most of the assets last year.

South32 has hired Morgan Stanley and Macquarie as defense advisers for the purpose.