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CHS reports strong first quarter results

Earnings experienced a dip from the record-breaking previous year but showed strong performances in energy, agriculture, nitrogen production and corporate sectors.

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CHS Inc., the nation's leading agribusiness cooperative, has unveiled its financial results for the first quarter ending Nov. 30, 2023, showcasing robust performance across its diverse business segments. The company reported a quarterly net income of $522.9 million, demonstrating resilience amid challenges, though marking a decrease from the remarkable $782.6 million in the first quarter of fiscal year 2023.

Despite the decline, the first quarter of fiscal year 2024 revealed several highlights.

Earnings overview

Earnings remained robust across all segments, even though they were down from the record-breaking first quarter of the previous fiscal year.

Revenues for the quarter were $11.4 billion, a decrease from $12.8 billion in the first quarter of fiscal year 2023.

Segment performances

  • Energy Segment: Experienced favorable market conditions in the refined fuels business, reflecting sustained global demand for energy products. Pretax earnings stood at $266.8 million, with a $129.8 million decrease compared to the prior year period. Factors include decreased refining margins and more favorable costs for renewable energy credits, offset by higher margins in the propane business.
  • Ag Segment: Reported pretax earnings of $169.7 million, reflecting a $117.6 million decrease versus the previous year. While the oilseed processing business thrived due to robust meal and oil demand, weak U.S. export demand for grains and oilseeds impacted overall earnings. Increased demand for wholesale and retail agronomy products partially offset the decline in margins for grain and oilseed processing businesses.
  • Nitrogen Production: Recorded pretax earnings of $36.5 million, representing a $60.4 million decrease. This decline is attributed to lower equity income from CF Nitrogen due to decreased market prices of urea and UAN.
  • Corporate and Other: Posted pretax earnings of $43.8 million, marking a $7.1 million increase from the prior year period. The rise is primarily attributed to increased interest income resulting from higher interest rates.

Jay Debertin, President and CEO of CHS Inc., acknowledged the relative decline in earnings but emphasized the strength of CHS's diversified ag and energy portfolio. He stated, "Our focus on execution and efficiency improvements bolstered results across all operations."

Despite the challenges, CHS remains optimistic about the future. Debertin highlighted the success of the domestic soybean and canola processing business and the international origination capabilities, adding value to farmer-owners' businesses.

CHS Inc.'s first-quarter results underscore its ability to navigate market dynamics and reinforce its commitment to adding value in the agribusiness and energy sectors. The cooperative's strategic approach, focus on efficiency, and diversified portfolio position it well for continued success in the evolving market landscape.

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