Britain's Royal Mail more than halved the expected growth rate of its UK parcels market for the next two years, due to fierce competition which helped send first-half operating profit down 21%. 

Parcels make up half of Royal Mail's turnover and its growth in an industry buoyed by online shopping is a key investment focus for shareholders in light of declining letter volumes. 

However, competition from the likes of TNT, Yodel, and Amazon, which has launched its own delivery service, has hampered progress, forcing the firm to cut its full-year revenue outlook for the division in July. 

Royal Mail said today that the impact of Amazon's plans would reduce the rate of growth in its addressable UK parcels market from 4-5% to 1-2% a year for it and other carriers for around two years. 

The group, sold off by the government in October 2013, said operating profit before transformation costs for the six months to September 28 fell to £279m, with higher pension costs and the absence of a VAT refund received a year ago also hitting numbers. 

The figure was, however, at the top end of an analyst forecast range of £237-279m. 

Group revenue grew 2% to £4.53 billion, with operating profit margins up by 20 basis points to 6.2%. 

The group's UK parcels business saw volume grow 2% but revenue fall by 1% due to pricing pressure, with UK letter revenue up 1% on volumes down 3% - slightly better than expected.