Britain's Royal Mail said group revenue for the nine months to December 28 rose 1%, marking a slowdown from the half year as an improved parcels performance was offset by fewer letters sales. 

Shares in Royal Mail, privatised amid much controversy in October 2013, have fallen 28% in the past year.

Its prospects have been hit by rising competition in parcel delivery and regulatory disputes.

In November, the firm warned growth in the UK parcels market would fall from 4-5% to 1-2% for at least two years as key player Amazon delivers more of its own packages and others add capacity to deal with rising online retail demand.

Royal Mail said today that its UK parcels business, worth half of group sales, saw a strong Christmas help volumes rise 3% in the period, with revenue improving to flat having been down 1% at the half year. 

UK letters volumes fell 3%, as expected due to the rising use of email, with revenue slowing from a first half rise of 1% to flat for the nine months. 

The firm's European parcels division fared much better with revenue up 8%. In total, group revenue for the nine months rose 1%, compared to 2% at the half year stage. 

Rival UK Mail said this month it had handled record parcel volumes in the build-up to Christmas with business boosted by the demise of courier City Link, which fell into administration in December. 

Royal Mail said UK costs would be flat for the full-year and that it expected to meet its profit expectations, with analysts on average forecasting operating profit before transformation costs of £585m.