Royal Mail has warned its transformation programme is "behind schedule", despite improving profits and revenues over the past six months.
The delivery giant also fired a warning shot to unions over the continued threat of strike action, saying industrial action "can only hurt" the company.
The firm updated investors over the performance of the business just a week after it secured an injunction to block postal workers from taking part in strike action.
In the trading update, the London-listed company warned that the UK business could make a loss in the 2020-2021 financial year, due to revenue and costs headwinds as well as significant investment by the company.
However, Royal Mail hailed its best UK sales performance for the "past five years" but warned the outlook for its letters business is "challenging".
The delivery giant saw revenues rise 5.1% to £5.16 billion in the half year to September 29.
Meanwhile, it jumped to £173 million pre-tax profit, up from a £33 million profit for the same period in 2018.
Rico Back, group chief executive, said the company's profitability has been "in line with expectations for the half year, despite considerable UK economic and political uncertainty".
John Moore, senior investment manager at Brewin Dolphin, said: “Royal Mail has delivered another mixed bag of results – but there is cautious optimism in today’s statement. The numbers show the best performance at its UK parcels and letters business for five years, continued growth at its international operation, and profits in line with guidance – all of which are undoubtedly positives after a tough 2019.
"However, its industrial relations issue could weigh heavily on Royal Mail’s ability to adopt technology-focused change and cut costs, which has been the main driver of the profitability of its UK business in recent years. Added to this, it almost goes without saying that Brexit remains a significant logistics challenge.”
