CHS Q1 earnings decline, Food impacted by Ventura Foods

11 Jan 2018

11 Jan 2018 --- CHS Inc., farmer-owned cooperative and grains and foods company, has reported net income of USUS$180.1 million for the first quarter of its 2018 fiscal year, compared to net income of USUS$209.2 million for the same period a year ago.

Consolidated revenues for the first quarter of fiscal 2018 were US$8.0 billion, the same as fiscal 2017. Pretax income was US$199.6 million and US$225.6 million for the first quarter of fiscal 2018 and 2017, respectively.

“Despite challenging market conditions, CHS experienced a solid first quarter thanks to our continued focus on three key priorities: strengthening relationships, sharpening operational excellence and restoring financial flexibility,” said CHS President and Chief Executive Officer Jay Debertin. “In the first quarter, we recorded solid earnings from our businesses and reduced long-term debt. These actions are helping to strengthen and grow CHS.”

For the first quarter of fiscal 2018, reporting segment results were:

Food
This segment is comprised of the company's investment in Ventura Foods, LLC (Ventura Foods), and generated pretax income of US$1.0 million in the first quarter of fiscal 2018, compared to US$10.6 million during the same period of fiscal 2017.

The decrease in earnings was due to lower margins at Ventura Foods.

Agriculture
The Ag segment, which includes domestic and global grain marketing and crop nutrients businesses, renewable fuels, local retail operations, and processing and food ingredients, generated pretax income of US$74.5 million for the three months ended Nov. 30, 2017, compared to US$109.2 million for the same period the previous fiscal year.

The US$34.7 million decrease was primarily the result of lower margins in grain marketing, processing and food ingredients and renewable fuels. Lower volumes in grain marketing and processing and food ingredients also contributed to the decrease.

The decrease was partially offset by an increase in earnings in the crop nutrients and country operations businesses.

Corporate
This category is primarily comprised of the company's wheat milling joint venture and its financing, hedging and insurance operations, and generated pretax income of US$5.3 million in the first quarter of 2018, compared to US$8.7 for the same period of fiscal 2017.

The decrease in earnings was due to lower earnings from the wheat milling joint venture and less interest revenue due to amending a receivables securitization agreement in late FY17, pursuant to which we no longer receive interest income from those receivables.