Royal Mail has said it delivered a “resilient performance in challenging markets” despite its group profit falling by a third in the last year.

For the year ending 27 March 2016, pre-tax profit fell 33% from £400m to £267m despite turnover increasing 1% year-on-year to £9.2bn (2015: £9.3bn).

Turnover derived from GLS, its European operation, was up 9% at £1.6bn, although Royal Mail said it expected this level of growth to slow in the coming years. Turnover from UKPIL - its domestic letters and parcels business - fell 1% to £7.7bn.

The group saw its letter volumes fall by 2%, which it said was better than its estimated drop of 4% -6%.

This, said Royal Mail, was due to an increase in direct mail advertising, which grew for the first time in four years.

Parcel volume continued to offset the declining letters market and grew by 3%, which the group accredited to new contract wins and “a strong performance from Parcelforce Worldwide”.

Royal Mail chief executive Moya Greene said: “We have delivered a resilient performance in challenging markets. We are introducing new and improved products and services and responding quickly to changing customer needs. These measures have helped us maintain our pre-eminent position in UK letters and parcels and drivel growth in GLS.”

Over the last year Royal Mail bought numerous companies to boost its service offering, including courier business Ecourier and shopping app Mallzee.

It also began a rollout of automated parcel sortation equipment, which the group said it will complete in the next two years.

The group said that ongoing investigations from Ofcom could impact its business and, potentially, its ability to provide a universal service.

An investigation into the group’s framework was began last June by the regulator, with the aim of assessing Royal Mail’s access pricing as well as the postal market’s regulatory framework.

Royal Mail said that a new regulatory framework affecting its ability to compete for business “may impact our revenues, our ability to compete in the highly competitive industry sectors in which we operate, and ultimately our ability to deliver the universal service on a sustainable basis”.

The group also alluded to the ongoing investigation into an alleged breach of competition law, put forward by competitor Whistl.

Royal Mail said it “disputes the allegation” and that it is “robustly defending the investigation”.

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