Strong growth at its European parcels business helped Royal Mail to beat first-half profit forecasts, though it warned an ongoing labour dispute could hit its second-half performance. 

Adjusted pretax profit dipped to £250m for the 26 weeks to September 24, from £252m, a year earlier, the postal and parcel delivery company said. 

Royal Mail, which has been in a row with the Communications Workers Union (CWU) over plans to replace the company's defined benefit pension scheme, said revenue rose 2% to £4.83 billion, helped by its European parcels business.

Revenue at UKPIL, which comprises Royal Mail's core UK and international parcels and letters delivery businesses, was broadly unchanged at £3.62 billion. 

GLS, the European parcels business, which covers 41 European markets, saw revenue jump to £1.2 billion from £942m. 

Royal Mail said it faced increased cost pressures in the second half, including the "potential impact of the industrial relations environment on the pace of change".

The company has been trying to cut costs to boost profit as more people move to online platforms to communicate. 

Royal Mail, which was privatised in 2013, is trying to modernise after years of underinvestment and has taken steps such as reducing layers of management, upgrading its technology and selling off property. 

Uncertainty over the outcome of pensions negotiations have long held back Royal Mail's stock, which have lost about a fifth of its value in the last year.