The company raised its operating profit by £83m to £404m last year despite a series of strikes by postal workers last autumn.
The business put its improved performance down to modernisation programmes and efficiency drives it was able to put in place.
Royal Mail chairman Donald Brydon said: “These are good results achieved against a backdrop of harsh economic conditions.”
However, most observers were more concerned with the confirmation by the government that, under business secretary Vince Cable it would look at bringing private capital in to accelerate the modernisation of the post office.
“We will seek to ensure an injection of private capital into Royal Mail, including opportunities for employee ownership,” said the government in its key coalition agreement document released yesterday.
Cable added: “Royal Mail is showing signs of financial recovery, but it still faces huge challenges.”
The previous Labour government, under the then business secretary Lord Mandelson shelved its controversial plans to sell off 30 per cent of the Royal Mail last year after widespread unrest from its backbenchers.
The Communication Workers’ Union general secretary Billy Hayes said: “This is old politics wrapped in new language. The British public has consistently rejected the privatisation of Royal Mail. The move to regurgitate failed policies will be deeply unpopular.”
Potential bidders for the post office include private equity house CVC Partners, Dutch postal giant TNT and Germany’s Deutsche Post, who were all interested when Labour proposed its plans in 2009.
Royal Mail said yesterday that three-quarters of its existing £2bn investment plan aimed at transforming Royal Mail’s operations had already been spent.
It also added last year that it cut around 8,000 jobs, all through voluntary redundancies.