CHS Experiencing Down Cycle and Earnings Decline

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13 Jan 2017 --- Farmer-owned cooperative and global energy grains and foods company CHS has reported a 22 percent decline in earnings for September to November 2016 compared with the previous year - but a net income of US$209.2 million for the first quarter of fiscal 2017.

The decline for the last period of 2016 is down to lower pretax earnings in CHS’s energy and foods segments, however they were partially offset by increased pretax earnings in the CHS Ag segment and from the company’s new nitrogen production segment. 

CEO Carl Casale acknowledges the down cycle of CHS but says it’s all part and parcel of business. 

"We've been in business for nearly nine decades, so we've experienced these types of cycles before," he said. "Although it's not possible to predict how long the current down cycle in the ag and energy industries will continue, we'll navigate through this period by continuing to run our businesses efficiently and effectively, by maintaining a strong balance sheet and by ensuring we serve our owners' and customers' needs in all we do.”

The CHS Ag segment, which includes its domestic and global grain and crop nutrients businesses, renewable fuels, local retail operations and processing and food ingredients, generated income of US$109.2 million, an increase of 58 percent over the same period a year ago. 

There were increased margins in grains and the wholesale crop nutrients business, but CHS’s processing and food ingredients businesses experienced decreased earnings because of lower margins in the domestic soybean crushing business as well as the sale of an international location. Although these were partially offset by higher margins in the canola crushing and soybean refining businesses.

The Foods segment generated pretax earnings of US$10.6 million during the first quarter of 2017, a decrease of $7.7 million compared to the same period the year before. This segment consists solely of CHS’s equity investment in Ventura Foods, LLC, manufacturer of dressings, sauces, mayos, oils, shortenings, margarines, bases and pan coatings. 

Corporate and other generated pretax earnings of US$8.8 million during the first quarter of fiscal 2017, compared to US$9.4 million during the same time period the previous year. This segment primarily represents the company's equity investment in the Ardent Mills, LLC wheat milling joint venture and Business Solutions operations. 

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CHS

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CHS Inc. (www.chsinc.com) is North America’s leading farmer owned cooperative and global agribusiness owned by farmers, ranchers and cooperatives across the United States. Diversified in energy, grains and foods, CHS is committed to helping its customers, farmer-owners and other stakeholders grow their businesses through its domestic and global operations. CHS, a Fortune 100 company, supplies energy, crop nutrients, grain marketing services, livestock feed, food and food ingredients, along with business solutions including insurance, financial and risk management services. The company operates petroleum refineries/pipelines and manufactures, markets and distributes Cenex® brand refined fuels, lubricants, propane and renewable energy products.

CHS products include refined vegetable oils, soy and wheat flours, textured soy protein, and specialty soy protein products. We also supply confectionary sunflower seeds, along with other small grains and processed nuts ingredients. Packaged foods for retail, foodservice and institutional markets are manufactured and distributed through Ventura Foods, LLC, a leading U.S.supplier of edible oil products and a 50/50 joint venture between CHS and Mitsui Co Ltd.

Branded products include:
Savorysoy® soybean salad oil
Honeysoy® soy flour and flakes
Ultra-Soy® and unflavored and flavored textured soy protein
Q isolated proteins
Agway® confectionary sunflower seeds
Marie’s® salad dressings and Dean’s Dips® consumer brands

We enjoy working with our customers to meet their specific needs, focusing on adding value to every customer’s business. And because CHS is owned by farmers, we are connected to commodity markets on a daily basis and can help manage risk for our customers. Ask about our supply chain management and commodity market advisories.

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