McBride has issued its 1H update, indicating Q2 sales have been weaker than expected - overall for Household in 1H20, the group reports a 1.4% decline on a constant currency basis. In particular, the UK (1H -8%) and Germany have weakened in the past two months. Regionally, the group continues to perform well in Asia, the South and East. France and the North remain challenging markets (as in 2H19). MCB had previously guided to a small decline in FY20 PBT vs FY19, but PBT is now expected to be c15% below current expectations (previous consensus PBT was £22.1m incl. pension interest). We trim FY20E PBT to £19.5m (which excludes pension interest of £0.7m), EPS 7.6p (prev £23.5m, 9.1p). We forecast a decline in 1H20E PBT to c.£10m (1H19 £15.1m). The raw material situation in 1H has been largely benign although distribution costs continue to rise. Management are implementing cost initiatives, with distribution/logistics back on the agenda. The group hopes to see cost benefits start to materialise as the year progresses, and into FY21. We assume profits rise next year albeit these forecasts are also reduced (see table 1 overleaf). At the half year, net debt is reported at £113.5m, a little below the FY19 level, thanks to an inflow from working capital and some FX benefit. For the full year, we predict a net debt/EBITDA ratio of 2.1x (on the banks’ measure). We revisit our TP using FMCG peer multiples and our new EPS forecasts. It moves to 70p. We leave our recommendation as Hold as we assume the shares will adjust quickly today on this news. Ludwig de Mot joined as CEO on 1 November and has initiated a review of the strategy, expecting to report on this in Q4 of the financial year.