The newly formed company has also booked an after tax profit of $US28 million.

Not a bad start for a company just three months old – created by the May 25 demerger of some unloved BHP Billiton assets.

The EBIT and profit figures are actually on a pro-forma basis designed to reflect what would have been had the results been from July 1 2014 to June 30 2015.

However, South32 CEO Graham Kerr said there was work to be done.

Not least of that is a plan to reduce controllable costs by at least $US350 million per annum by the end of the 2017-18 financial year.

Part of those cost reduction plans will revolve around the optimisation of South32’s procurement functions. 

There were $US282 million worth of productivity-led and other cost efficiencies embedded during FY15 as South32 fast tracked towards its regional operational model.

This included the decision to close offices in Wollongong, Brisbane, Townsville and Australind.

As the next phase of the regional model is implemented, there are expected to be further reductions in functional support and fewer layers of operational management.

There is also a plan to reduce sustain capital expenditure by 9% to $US650 million in the 2015-16 financial year.

At an asset level that will include a reduction in contractor usage and rates; the optimisation of energy fuels and broader consumables usage; equipment and labour productivity; and numerous procurement initiatives.

 “We have hit the ground running since becoming an independent standalone company,” Kerr said.

“Our regional operating model and teams are in place, we are right-sizing our systems and processes and driving the necessary cultural change across the group.”

Annual production records were set in Brazil aluminium, Illawarra metallurgical coal, Australian manganese alloy and South African manganese ore. 

Zinc production at the Cannington mine also grew to 72,000t.

Kerr said the company had designed a strategy that was intentionally simple and tailored to suit the company’s suite of assets.

“By optimising the performance of our existing assets, converting high value brownfield resources into reserves and identifying new opportunities we will maximise return on invested capital and deliver sector-leading total shareholder returns.”

The company is fast tracking the implementation of its regional operational model.

That includes replacing layers of management, aggregating functional support at the regional head offices, fostering stronger relationships with stakeholders and optimising its procurement function.

South32 chief financial officer Brendan Harris said the company had a strong balance and well defined capital management framework.

“We intend to distribute a minimum 40% of underlying earnings as dividends to shareholders in each six month reporting period,” he said.

“This payout ratio policy protects the balance sheet when margins are compressed and rewards shareholders as financial performance improves.”

At June 30, South32 had net debt of $US402 million. It has a BBB+ credit rating from Standards & Poor’s and a Baa1 rating from Moody’s.

Safety is one area Kerr wants to see addressed. He said a step change in performance was required to eliminate fatalities occurring in the business.

“We tragically lost two of our colleagues during FY15 and another in July,” Kerr said.

“That’s not acceptable and we must do more to ensure that every person goes home safely at the end of their shifts.”

One of the FY15 fatalities was at Worsley Alumina, the other at South Africa Manganese.