Growth in parcels revenue failed to offset the continuing decline in letter volumes in the first nine months of its financial year, Royal Mail said today.

While parcel volumes and revenue were both up 6% in the nine months ended 23 December, with the firm citing a strong performance during the Christmas period, addressed letter volumes were 8% lower and letters revenue 6% down year-on-year.

It meant the operator’s core UKPIL revenue was down 1% in the period, although group revenue was up 2% overall thanks to continued growth in its international business GLS.

Royal Mail expects operating profit before transformation costs to be £500m to £530m for the full year 2018/19, which is at the lower end of analysts’ expectations.

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Gerald Khoo, an analyst at broker Liberum, said the continuing weakness in letters boded ill and recommended shareholders sell.

David Kerstens at Jefferies said that while Royal Mail’s £3bn valuation was in line with the postal sector, current share dividends were “unlikely to be sustainable in view of deteriorating volume trends.”