Today ConAgra Foods, Inc. (NYSE:CAG) is announcing that underperformance in the Consumer Foods segment will negatively impact its fiscal 2009 first quarter diluted EPS from continuing operations. Excluding gains and losses impacting comparability (for example hedging losses temporarily classified as unallocated Corporate expense, as discussed below), earnings are expected to be slightly below the previously announced estimate of $0.26-$0.28 per diluted share. While the company does not expect any material change in its full year fiscal 2009 outlook, it is in the process of determining whether the first quarter results would cause any downward revision to the low end of the expected EPS range for the full fiscal year. The company is still closing its books for the fiscal first quarter and finalizing GAAP results and will provide more EPS and operating segment details in its regularly scheduled earnings release on Sept. 18, 2008.

The first-quarter earnings softness is driven by lower-than-planned profits for the Consumer Foods segment, which generated high single-digit sales growth on essentially flat volume, but incurred higher-than-planned inflation. Consumer Foods segment operating profits will be below prior-year first-quarter amounts. Key areas of underperformance were cooking oils, tablespreads, Banquet frozen foods and popcorn. The company’s supply chain and SG&A savings initiatives are on track against full-year targets. Sales and profits for the Commercial Foods segment (formerly the Food & Ingredients segment) were in line with company expectations.

The company had planned to provide the investment community with a business update Wednesday, Sept. 3, 2008, at the Lehman Brothers Back-to-School Conference in Boston, Mass. Because the company is in the process of quantifying the implications of the first quarter Consumer Foods underperformance on the full year outlook, the company has decided not to participate in the conference. It will provide investors with a full fiscal 2009 update as part of the Sept. 18, 2008 first-quarter earnings release.

First-Quarter Financial Reporting: Derivative Gains & Losses (Hedging) & New Segments

The fiscal first-quarter reported EPS, on a continuing operations basis, will include an approximate $0.05-$0.06 net loss from the mark-to-market impact of derivatives used to hedge input costs (discussed below), temporarily classified as unallocated Corporate expense and considered by the company to be an item impacting comparability until later reclassified into results of operating segments.