Hilton has issued a further update re trading for FY22. In late September, with its interim results, it warned that FY22 profits would fall short of market expectations and we reduced our forecasts by 20%. This week’s update flags another shortfall is expected. In September, the main profit issue was around recovering cost inflation, most notably in its multi-customer sites, and in fish in particular, which had seen the largest increase in raw material prices. This remains the reason behind this subsequent warning, with the group reporting that, although it has made some progress in 2H in mitigating or passing through inflation, this has occurred at a slower pace than anticipated. We make a further adjustment to our forecasts, reducing FY22E PBT by £8m to £55m (-13%), all of which we have assumed comes off EBIT. Hence, we have now downgraded our EBIT forecast by £18m, likely virtually eliminating profits from the fish operations (Seachill and Foppen). We previously also increased interest costs by £7m, so the overall change to our FY22E forecasts in the last 8 weeks is £25m or c33%. The group is hopeful that it will continue to make progress over the next few months in recovering this inflation, but it would be sensible to assume that there is some knock-on effect into FY23E too. We reduce profits here by £5m to £67m PBT and make a further, smaller, trim to FY24E too, of £3m to £77m. The scale of these downgrades will undoubtedly dent investor confidence. The rating has already seen a sharp reduction, so we don’t expect it to change considerably again, but we do reduce our TP in line with the reduction in profit forecasts. It falls from 740p to 676p, but with the share price at 550p, our recommendation remains BUY.