Royal Mail, announcing a £217 million profit, has urged a revision of its delivery targets after missing more than half of them, including its objectives for first class and recorded mail.

The postal operator, which was losing £1 million a day in 2002, credited its financial turnaround on a revamp which has cut the second daily mail delivery, axed 34,000 jobs and streamlined logistical operations.

Profits at the company's letters business surged from £89 million to £261 million in the April-to-September half, helped by higher stamp prices, with losses at the Post Office division narrowing by 42 per cent to £52 million amid a branch rationalisation programme.

The improvement left the company on track to hit a full-year profits target of £400 million, which will trigger payments of at least £800 per person to remaining staff.

Allan Leighton, the Royal Mail chairman, said: "Thirty months into the renewal plan, it's clear we have made huge progress.

"Profitability has improved and the jobs of nearly 195,000 people have been changed – probably the biggest transformation programme in UK indsutry in a quarter of a century.

"Figures for lost mail have been halved, customer service is improving and major operational change has been implemented."

However, the company missed eight of 15 delivery targets in the July-to-September period, despite across-the-board improvements since a "dip" in the spring when more than 11 per cent of first class letters were not delivered the next day.

In the latest quarter, that proportion declined to less than 8 per cent.

Adam Crozier, the Royal Mail chief executive, blamed the company's performance shortfall on the plethora of red tape.

"Royal Mail is subject to the tightest regulatory control in Europe," Mr Crozier said.

"An excess of targets is not helping Royal Mail focus more on the few targets which are really important to our customers, like first class delivery."

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