CHS reports lower earnings for Q1

Leading U.S. farmer-owned cooperative reports first-quarter net income of $266.5 million, down 30% from a year ago.

CHS Inc., the nation's leading farmer-owned cooperative, reported net income of $266.5 million for the first quarter of its 2016 fiscal year (Table).

Earnings for the Sept. 1-Nov. 30, 2015, period declined 30% from the same period of fiscal 2015. The decrease was primarily attributed to lower margins for much of the company's energy and agricultural businesses.

Revenues for the quarter were $7.7 billion, down from $9.5 billion for the same period in fiscal 2015 largely due to lower selling prices for the energy and grain products that make up a significant portion of CHS business.

First-quarter earnings for the Energy segment declined 31%, driven primarily by decreased refining margins as well as declines in CHS lubricants and transportation businesses. These were partially offset by increased propane earnings.

Earnings for the CHS Ag segment — which includes the domestic and global grain and crop nutrient businesses, renewable fuels, local retail operations and processing and food ingredients — declined 50% over the first quarter a year ago. This was primarily due to lower logistics performance and margins within the grain marketing business, along with decreased grain volumes and margins for the company's country elevator locations.

Earnings within the CHS wholesale crop nutrients business declined in the first quarter, also due to decreased margins. Renewable fuel manufacturing, marketing and distribution were lower for the period due to lower ethanol margins, which were partially offset by a manufacturing volume increase from a late-fiscal 2015 ethanol plant acquisition. The processing and food ingredient operations reported increased year-over-year earnings for the quarter, primarily due to higher soybean crushing margins.

CHS reports earnings for its business services and food-related joint ventures under Corporate & Other. Combined earnings for the CHS Hedging, CHS Capital and CHS Insurance businesses increased slightly during the first quarter compared with a year ago. Earnings also increased for CHS's share of food manufacturer and distributor Ventura Foods LLC but declined for its share of earnings from the Ardent Mills wheat milling joint venture.

CHS is a leading global agribusiness owned by farmers, ranchers and cooperatives across the U.S. that is diversified in energy, grains and foods. CHS supplies energy, crop nutrients, grain marketing services, animal feed, food and food ingredients, along with business solutions such as insurance, financial and risk management services. It operates petroleum refineries/pipelines and manufactures, markets and distributes Cenex brand refined fuels, lubricants, propane and renewable energy products.

CHS Inc. earnings by segment (millions $)

 

-Quarter ended Nov. 30-

 

2016

2015

Energy

192.9

279.2

Ag

69.3

139.3

Corporate & Other

27.7

17.2

Income before income taxes

289.8

435.7

Income taxes

(23.7)

(57.4)

Net income

289.9

378.3

Net income attributable to non-controlling interests

0.3

0.4

Net income attributable to CHS Inc.

266.5

378.7

 
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