Royal Mail has announced a rise in annual profits after revenues growth from parcel deliveries more than offset a further decline in letter volumes.

In its first set of results since its controversial £3.3 billion stock market flotation in October, the company said operating profits after transformation costs were £430 million in the year to March 30, against £403 million a year earlier.

It said its letters performance was at the better end of expectations, with revenues down 2% to £4.6 billion on a year earlier.

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Addressed letter volumes declined by 4% but the trend improved over the year due to stronger economic conditions and one-off impacts such as energy companies writing to customers about price rises.

Parcel revenues increased by 7% but in volume terms the one billion items delivered in the period was flat compared with the previous financial year.

Chief executive Moya Greene said: "The competitive environment on the parcels side is more intense. We are taking steps to remain the leader in this growing market."