Penna Consulting has issued a warning that its profits for the next quarter will be hit in the financial year ending in March.

The recruitment company said demand for its outplacement services had dropped because many City companies were no longer downsizing, meaning fewer staff were being made redundant.

However, the listed company’s recruitment business has been performing well and is expanding. Its Change Consulting business has also been performing well and the company has reduced its overheads.

But the improvements in the recruiment business have not been sufficient to cancel out the effect caused by weakened demand for its core outplacement services.

Chief executive Suzie Mumme has reviewed the firm’s operations and is planning to announce a programme of measures to return the company to growth when Penna announces its results later this year.