Royal Mail beats expectations after tight cost controls

Royal Mail handled 3 per cent less addressed letters in the year, a smaller decline than it had forecast.

The former postal monopoly said adjusted operating profit before transformational costs rose 5 per cent to £742m in the year to March 27. Analysts were expecting a profit of around £727m.

Royal Mail handled 3 per cent less addressed letters in the year, a smaller decline than it had forecast, largely due to the return of direct delivery volumes.

Full year pre-tax profits fell 33 per cent to £267m as it took a hit from transformation costs.

The postal delivery company said the fall reflects one-off items, such as pension charges, that distorted its balance sheet.

Revenue rose 1 per cent to £9.2bn as chief executive Moya Greene hailed a "resilient performance".

Parcel deliveries, where competition from the likes of FedEx and UPS have eaten into Royal Mail's market share, rose 3 per cent.

Under Ms Greene, the company has embarked on an ambitious cost-cutting drive and the company confirmed that it reduced its headcount by 3,500 over the year.

Ms Greene added: "We are introducing new and improved products and services and responding quickly to changing customer needs.

"These measures, alongside our emphasis on customer focus and delivering a value for money service, have helped us to maintain our pre-eminent position in UK letters and parcels and driven growth."

In the UK, revenue fell 1 per cent to £7.6bn.

The 500-year-old company was privatised in 2013 and listed on the London Stock Exchange. Shares fell over 3 per cent at 491p in morning trading.