Royal Mail halves expected growth rate as profits fall 21%

The Royal Mail has halved the expected growth rate of its UK parcels market to 1-2% due to fierce competition which helped send first-half operating profit down 21%.

The group, sold off by the government in October 2013, said operating profit before transformation costs for the six months to September 28th fell to £279m, with higher pension costs and the absence of a VAT refund received a year ago also hitting numbers.

The figure was at the top end of an analyst forecast range of £237-279m.

Pricing pressure pushed UK parcels revenue down 1%, with UK letter revenue up 1%.

Group revenue rose 2% to £4.53bn.