CHS Q1 revenues up 18%

Date:04-13-2012

CHS Inc., the nation's leading producer-owned cooperative, reported earnings of $494.7 million through the second quarter of its 2012 fiscal year.

Earnings attributed to CHS operations for the first six months of fiscal 2012 (Sept. 1, 2011 - Feb. 29, 2012) increased 25 percent over the $396.3 million for the first half of fiscal 2011.

Revenues for the six-month period of fiscal 2012 were $18.6 billion, compared with $15.8 billion for fiscal 2011, reflecting higher values for the commodity energy, grain and crop nutrients products that comprise the majority of CHS business.

For the second quarter (Dec. 1, 2011 - Feb. 29, 2012), CHS posted income of $78.5 million, compared with $194.6 million for the same period in fiscal 2011, a decline of 60 percent. Revenues for the quarter were $8.8 billion, compared with $7.7 billion for the second quarter of fiscal 2011.

Earnings for the second quarter reflected reduced margins within a number of CHS business segments. In Energy, refining margins declined for both the CHS refinery at Laurel, Mont., and the National Cooperative Refinery Association, of which it owns nearly 75 percent. CHS propane and renewable fuels operations reported increased earnings. Energy segment earnings for the first six months of fiscal 2012 are ahead of the same period in fiscal 2011, largely due to higher refining margins during the first quarter of fiscal 2012.

Second quarter earnings also declined within Ag Business - which consists of crop nutrients, grain marketing, oilseed processing and the company's Country Operations locally controlled retail service centers. Product margins declined within CHS wholesale crop nutrients and grain marketing. Overall merchandise margins increased for retail operations, while grain margins decreased. This, combined with increased operating expenses from acquisitions and expansion, resulted in lower earnings. While the company's oilseed processing business reported improved margins, earnings decreased primarily from recent acquisition costs. Year-to-date, earnings for the Ag Business segment also declined over the same period in fiscal 2011.

CHS reports results for its business services operations and its two food processing-related joint ventures under the Corporate and Other category. Lower margins for CHS financing businesses, as well as decreased margins within the company's two food-related joint ventures, contributed to lower overall results in this category for the second quarter and year-to-date.