Royal Mail profits fall 33% to £267m
Royal Mail has said full-year pre-tax profits slumped 33% to £267 million 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.
However, revenue rose 1% to £9.2 billion 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%.
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% to £7.6 billion as letter volumes fell by 3%.
Adjusted annual operating profits before transformation costs - Royal Mail's preferred measure of performance - rose 5% to £742 million.
The 500-year-old company was privatised in 2013 and listed on the London Stock Exchange. Shares were down over 3% at 491p in morning trading.
Dave Ward, Communication Workers Union general secretary, said: "Royal Mail Group's strong financial performance, in the face of tough market and regulatory pressures, show the company is well placed to deliver future growth and innovation in the business, working closely with the CWU.
"The continued fall in letter volumes and the significant level of competition Royal Mail already faces should serve as a reminder to Ofcom that protecting daily deliveries should be the number one priority of its review."
Brian Scott of Unite said: "Unite members will be extremely frustrated that their hard work to deliver a positive financial result is not being recognised by the company.
"With the UK part of Royal Mail making £608 million profit, it's clear that the company can afford to reward Unite members for their hard work with an improved pay offer.
"A failure to do so will lead to the overtime ban and work to rule that our members are engaged in hitting deliveries to homes and businesses. A fact which we note is glossed over in Royal Mail's annual report.
"As well as helping to deliver a 5% increase in the Royal Mail group's profits, Unite members have made a valuable contribution to quality of service. While the target of 93% for first class deliveries was missed by 0.5%, it would have been much worse had it not been for Unite members' commitment to the public postal service.
"It's time for Royal Mail to recognise the invaluable role our members play by negotiating a pay offer which properly reflects their hard work."
An Ofcom spokesman: "We absolutely intend to secure the universal postal service, which requires Royal Mail to deliver letters six days a week, and is protected by law."