SHARES in Northern Recruitment Group nosedived yesterday after the company issued a profits warning.

The Newcastle group, which also has offices in Middlesbrough, Stockton, Sunderland and York, said it had hoped to win more tenders.

The company said in February that it made a weak start to the second half of its financial year, with profits down because of weak revenue.

In a statement yesterday, it said: "We stated in our interim report, on February 17, that the outcome for our current financial year to June 30 would depend critically on the result of tenders for a number of projects.

"We have recently been successful in winning two major contracts, which will provide significant additional business for both NRG Connect and NRG Call Centre Solutions. However, it is now apparent that the revenues to be generated in the current financial year from these contract wins will not be as high as originally forecast.

"In addition, revenues from temporary recruitment have remained depressed. As a result, profit for the current year will be materially lower than market expectations."

The company said most of its permanent recruitment businesses had continued to perform robustly and it was recruiting extra staff - although it would not say how many - to exploit growth opportunities.

NRG made no comment about its contract wins but said that a strong pipeline of temporary recruitment inquiries should provide a good start for the next financial year.

In NRG's interim results, in February, it reported a drop in pre-tax profits to £1.1m, from £1.6m last year.

The company handles work for HM Revenue and Customs and the Department for Trade and Industry, and recently won public sector clients including schools inspection body Ofsted.

The company also has offices in Yorkshire and Scotland.

Despite the downturn, NRG is expected to continue expanding in the North-East, where last year it said growth had been most robust.

Shares closed more than 13 per cent down yesterday at 120p. In September last year, NRG shares reached 233p. In 2003, they were worth only 40p.