Royal Mail reported a better than expected annual profit, as tight cost controls more than made up for losses due to high competition in the UK postal market.
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.