Britain's Royal has projected an increased level of cost cuts as it battles to boost the profitability of its domestic letters and parcels business.

This helped send its shares up more than 6% to a three-month high today. 

Prospects for Royal Mail, privatised in 2013, hinge on its ability to cut costs and modernise its operations in order to help win more of a parcels market buoyed by a boom in online shopping. 

Announcing first-half results, the company said it expected costs in UK letters and parcels to be at least 1% lower for the full year. 

Chief executive Moya Greene told Reuters the group had kept a tight grip on costs and had put in extensive preparations for the Christmas period, important for its full-year outcome. 

"Everything that can be operationally, we have done ... At Christmas, we know it's our time to shine," she said. 

Royal Mail said it had managed to reduce operating costs through measures like job cuts, managing its vehicles better and boosting its processing and delivery productivity. 

"We know that change in the operation is necessary and all the things that we did over the past two years now have given us the platform that has allowed us to accelerate that," Greene said. 

Royal Mail, which also reported a better than expected performance from its European parcels arm GLS, said UK parcel volume grew 4% in the first half, driven by new customer wins and initiatives.  

The company said its revenue was little changed at £4.4 billion for the six months ended September 27, in line with analyst expectations. 

Adjusted pretax profit fell 16% to £240m, though excluding so-called transformation costs including pension expenses the group said operating profit was flat.

The company will pay a first-half dividend of 7 pence per share, up from 6.7 pence the same time last year.