Shares in the Royal Mail lost up to a fifth of their value in early trading on Thursday after a series of stark warnings published in their half-year results.

An increase in pre-tax profits, which rose to £173million was recorded, largely thanks to an increase in the number of parcel deliveries.

After recording a loss of £4million for the same period last year, operating profits came in at £51million for the six months to September.

However, with the decline in the volume of letters being posted and with the threat of strike action by staff, the service said it was expecting tougher times ahead.

Royal Mail is in the midst of a turnaround programme that is designed to adapt the service for the modern technological age.

In an announcement released with the results, Royal Mail said: "current industrial relations environment is slowing rate of change in the UK operation.

"This is likely to impact our rate of productivity improvement. As a result, we continue to expect further margin pressure in UKPIL (parcels, international and letters) in 2021.

Royal Mail chief executive Rico Black said: "Our profitability performance is in line with our expectations for the half year, despite considerable UK economic and political uncertainty.

"Group revenue was up 5.1 per cent, including our best UK revenue performance in five years. UK parcel revenue growth more than offset letter revenue declines.

"The UK letter revenue performance in the first half is our best for five years. It will also benefit from the General Election in the second half.

"But, the outlook, excluding elections, for the letters business in the UK is challenging.

"Lower than anticipated GDP and lower GDP forecasts for 2020-21, together with business uncertainty, are expected to have an impact on addressed letter volumes.

"For 2019-20, we now expect addressed letter volume decline (excluding elections) to be in the 7-9 per cent range.

"In 2020-21, we expect letter volume decline (excluding elections) may be in the 6-8 per cent range.

"Our transformation is behind schedule. We are investing more because of the industrial relations environment, the General Election and Christmas, to underpin our Quality of Service at this key time.

"This is likely to impact our productivity for the remainder of the year. When combined, revenue and cost headwinds could possibly result in a break-even or loss-making position for the UK business in 2020-21.

"We maintain the ambitions associated with our Journey 2024 plan as set out in our full year results in May.

"People are posting fewer letters and receiving more parcels. We have to adapt to that change.

"The challenging financial outlook in the UK means now, more than ever before, we need to make the changes required - and accelerate them - to ensure a successful UK business.

"We remain committed to investing £1.8 billion in our transformation. We want to change, working with our unions, but we can only do so through an affordable resolution. We have changed many times before. We will do it again."

After the announcement, shares in Royal Mail were trading up to 18 per cent down, although the later rallied slighty.

As at 10.30am, shares that had closed yesterday at 231p were trading at 194p.