BHP reported its lowest annual profit in three years as the world’s biggest miner by market capitalisation warned its prospects hinged on China’s efforts to revive its property sector and the severity of any steel production cuts by Beijing.

The Australian group, which has a heavy reliance on Chinese construction demand for steel made from its iron ore, said underlying profits for its year to the end of June were $13.4bn, down 37 per cent from the $21.3bn recorded a year earlier. BHP cut its dividend by almost half to $1.70, down from $3.25 the year before.

China, the world’s second-largest economy, is struggling to regain momentum as it grapples with a slowdown in the property sector, high youth unemployment and deflation. Its lacklustre growth is clouding the outlook for the big mining groups, which had posted record high earnings in recent years helped by soaring commodity prices. BHP said lower prices across major commodities and the effect of inflation, particularly on labour, diesel and electricity prices, were now putting pressure on profits.