Analysts have reacted cautiously to Royal Mail's year end results, which saw the group's turnover grow 2% year-on-year but annual profit fall by more than a third (37%).

Brokerage Jefferies said the group was underperforming and estimated operating expenses would remain stable at best despite a cost drive.

It added that much of the business's future cost avoidance target of £230m rested on the success of a trial of a reduced working week agreed in the new pay and pensions deal struck by the CWU.

Analyst Liberum advised shareholders to sell. It said that the group had performed "better than expected" but that the business had a mixed outlook.

It said that while it expected Royal Mail's parcel volume and turnover performance to continue growing at the present rate, the declining letter volume represented a case for caution.

It added that, in part due to the implementation of the General Data Protection Regulation (GDPR), letter volume would decline at the higher end of an estimated 4-6%.

However Frank Proud, analyst and director at Apex Insight, told MT that he thought Royal Mail's results were, on the whole, positive.

Despite this, he warned that elements of the parcels market that were growing the fastest - same day delivery for example - were not part of Royal Mail's portfolio.

There, he warned, "they are growing a little bit slower than the market as a whole".