* Underlying profit up 41 pct, but misses forecasts
* CEO says not interested in coal acquisitions
* Shares slide to record low in broader rout (Adds CEO comments)
By Sonali Paul
MELBOURNE, Aug 24 (Reuters) - South32 Ltd S32.AX , the mid-sized miner spun off by BHP Billiton (LONDON:BLT) BHP.AX in May, said annual underlying profit jumped 41 percent and flagged big cost cuts over the next three years to help boost returns in a weak commodity market.
The company was cast out of BHP with a suite of unloved coal, aluminium, manganese, and silver assets mostly in Australia and South Africa but with a strong balance sheet, positioning it to weather tough conditions and snap up assets.
"Our business is performing well despite the difficult environment," Chief Executive Graham Kerr told analysts on a conference call.
While the profit rise stands in stark contrast to other miners' results, South32 continued to be battered by the broader market rout, with its stock sliding as much as 3.9 percent to a record low on Monday.
Underlying pro-forma profit for the year to June rose to $575 million, but that was well below analysts' forecasts of $700 million, according to Thomson Reuters.
However, underlying earnings before interest and tax, which rose 56 percent to $1 billion, were in line with analysts' estimates.
Profit gains were driven by $282 million in cost cuts, mostly in labour and contractor costs.
Kerr has said the company would consider acquisitions, but said on Monday it was not attracted to any of the coal assets up for sale in Australia because those mines faced challenges in gaining permits to extend their lives.
"We don't see any strong returns being generated," he told reporters.
Instead, South32 is focused cutting costs by at least $350 million a year, or around 8 percent of its controllable cost base, through the 2018 financial year.
The company expects to cut stay-in-business capital spending by 9 percent to $650 million in the year to June 2016, with plans to reduce output from most operations except Australian energy coal, Australian manganese, the Worsley alumina plant, and Cannington silver mine.
South32 warned that power shortages in South Africa posed challenges. But Kerr said it did not face the same problems that rival Glencore Plc GLEN.L has at its Optimum coal arm, which is in administration, stuck with a loss-making coal supply agreement with the national power company, Eskom.
South32 sees opportunities with Eskom as the utility is building two major new coal-fired power plants.
"We sit on top of some large high quality resources that could fill that gap in coal supply in a tightening market," Kerr said.