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CHS: Strong global commodity demand increases earnings

Company reports a 9% revenue increase year-over-year in its Q2 results.


CHS Inc. released results for its second quarter ended Feb. 28, 2023, and reported quarterly net income of $292.3 million compared to $219 million in the second quarter of fiscal year 2022.

For the first six months of fiscal year 2023, the company reported net income of $1.1 billion and revenues of $24.1 billion compared to net income of $671 million and revenues of $21.2 billion recorded in the first half of fiscal year 2022.

"Strong global demand for commodities and improved market conditions for refined fuels led to increased earnings for the quarter, as well as the first half of the fiscal year," said Jay Debertin, president and CEO of CHS Inc. "The strength of our diversified portfolio offset margin pressures experienced within our ag segment, particularly wholesale and retail agronomy products.

"Looking ahead, we will continue to invest on behalf of our owners in infrastructure, supply chain capabilities and innovative technology throughout our expansive global network to maximize value for our member cooperatives, farmer-owners and customers."

Fiscal 2023 second quarter highlights include:

  • Revenues of $11.3 billion compared to $10.3 billion in the second quarter of fiscal year 2022, a year-over-year increase of 9%
  • Strong refining margins and market conditions in refined fuels business drove significantly improved earnings in CHS's energy segment
  • Decreased prices for agronomy products and ethanol contributed to lower earnings in its ag segment
  • CF Nitrogen investment delivered solid earnings due to strong global demand for urea and UAN, although selling prices for those products have decreased

Pretax earnings of $264.8 million for the second quarter of fiscal year 2023 represent a $254.0 million increase versus the prior year period and reflect:

  • Higher refining margins resulting from increased global demand, favorable pricing on heavy Canadian crude oil and improved market conditions for refined fuels
  • Higher propane margins driven by global markets and price volatility
  • Higher prices for renewable energy credits that partially offset higher margins

Pretax losses of $81.6 million represent a $136.7 million decrease in earnings versus historically strong earnings in the prior year period and reflect:

  • Lower margins due to market-driven price decreases across most ag segment categories, including wholesale and retail agronomy products and renewable fuels
  • A reduction in oilseed processing margins due to the timing of the impact of mark-to-market adjustments

Nitrogen production
Pretax earnings of $81.7 million represent a $72.5 million decrease versus the prior year period due to lower equity income from CF Nitrogen attributed to a decrease in urea and UAN selling prices.

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