CHS reports net income of US$346m for the first half of fiscal 2018

05 Apr 2018 --- Farmer-owned cooperative and global grains and foods company, CHS Inc., has reported a net income of US$346.7 million for the first half of its 2018 fiscal year (six-month period ended Feb. 28, 2018), compared to net income of US$223.7 million for the same period a year ago.

Consolidated revenues for the first half of fiscal 2018 were US$14.9 billion, down from US$15.4 billion for the first half of fiscal 2017. Pretax income was US$185.0 million and US$249.1 million for the first half of fiscal 2018 and 2017, respectively.

“CHS made meaningful progress in the first half of the fiscal year 2018 as we continue to position CHS for higher performance,” says CHS President and CEO, Jay Debertin. “The global environment for our businesses serving agriculture remains challenged and we continue to drive towards our priorities of better efficiency, strengthening relationships and a more focused business portfolio. We have more work to do and we are seeing an improvement that will make us a stronger company.”

For the second quarter of fiscal 2018 (Dec. 1, 2017 through Feb. 28, 2018), CHS reported net income of US$166.7 million compared with earnings of US$14.6 million for the same period in fiscal 2017. Revenues for the second quarter of fiscal 2018 were US$6.9 billion, down from US$7.3 billion for the second quarter of fiscal 2017.

Results for the quarter were attributed to:
• Increased margins at the company's refineries.
• Decreased volumes and margins within the Ag segment.
• A significant tax benefit recorded during the quarter related to the Tax Cuts and Jobs Act of 2017.

Reporting segment results included:

Ag
• 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$43.6 million for the six months ending Feb. 28, 2018. That compares to US$99.9 million for the same period the previous fiscal year.
• The US$56.3 million decrease was primarily the result of a decline in grain and oilseed volumes in the grain marketing and country operations businesses, and lower prices across the majority of the Ag sub-segments.

Corporate and other
• This category is primarily comprised of the company's wheat milling joint venture (Ardent Mills), its investment in Ventura Foods, LLC (Ventura Foods) and its financing, hedging and insurance operations. Corporate and Other generated pretax income of US$9.1 million in the first half of 2018 compared to US$30.2 million for the same period of fiscal 2017.
• The US$21.1 million decrease was due to reduced interest revenue from the company's financing business resulting from the sale of loans receivable and lower earnings from our investment in Ventura Foods.