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Strong global grain demand, market volatility raise CHS earnings

Company intends to return $1 billion cash to owners in 2023

PIXABAY
PIXABAY

CHS Inc. has reported net income of $1.7 billion for the fiscal year ended Aug. 31, 2022, compared to $554 million for fiscal year 2021.

Key financial drivers for fiscal year 2022 results include:

  • Consolidated revenues of $47.8 billion for fiscal year 2022 compared to $38.4 billion for fiscal year 2021, a year-over-year increase of 24%.
  • Refining margins in its energy segment were higher and drove improved earnings due to the tightening global supply and demand landscape.
  • The CHS global grain and processing and wholesale agronomy businesses within its ag segment benefited from strong global demand and increased margins.
  • Equity method investments performed well, with increased CF Nitrogen earnings resulting from strong global demand for urea and urea ammonium nitrate (UAN), coupled with decreased global supply.

“We appreciate the support of our member cooperatives and farmer-owners, which enabled us to deliver a substantial increase in earnings for the fiscal year, while also helping feed people around the world,” said Jay Debertin, president and CEO of CHS Inc.

“Additionally, our employees demonstrated their dedication to helping our owners and customers succeed in a turbulent year for agriculture."

$1 billion in cash returned to owners

As a result of these collective efforts, CHS intends to return $1 billion in cash patronage and equity redemptions to our member cooperatives and farmer-owners in fiscal year 2023, said Debertin.

The total amount of cash to be returned to owners is a decision made by the CHS board of directors at the close of each fiscal year.

The CHS board has elected to return $500 million in cash patronage based on business done with CHS in fiscal year 2022, which ended on August 31, 2022. Additionally, the CHS board has elected to return $500 million in cash to its owners through equity redemptions.

This benefit of CHS ownership will be shared by hundreds of member cooperatives and thousands of farmer-owners. The total of $1 billion distributed in cash would be the largest annual distribution to owners in CHS history and would bring the total amount returned to owners over the last 10 years to more than $3.1 billion.

“We are proud of our role in the cooperative system," Debertin said. "We will continue to make investments that strengthen rural America and help our farmer-owners and customers meet the growing demand for agricultural products."

Debertin noted investments in infrastructure, supply chain capabilities, people and innovation are driving operational and efficiency gains throughout the CHS network.

“Although economic uncertainty, logistical challenges and inflationary pressures remain, CHS is well-positioned to maximize value for our member cooperatives and farmer-owners," he said.

Fiscal Year 2022 Business Segment Results

Energy

Pretax earnings of $616.6 million represent a $627.1 million increase versus the prior year and reflect:

  • Higher refining margins and increased discounts on heavy Canadian crude oil processed by our refineries contributed to a significant increase in our refined fuels business income; these increases were partially offset by higher renewable energy credit costs and higher natural gas costs, as well as lower margins in our propane business.

Ag

Pretax earnings of $657.6 million represent a $359.5 million increase versus the prior year and reflect:

  • Increased margins across all our Ag segment product categories, due to strong global market demand and global supply disruptions
  • Continued favorable markets for oilseed processing, which were bolstered by robust meal and oil demand
  • Increased revenues from feed and farm supplies, despite less favorable weather during spring planting and application season

Nitrogen Production

Pretax earnings of $478.0 million represent a $357.0 million increase versus the prior year and reflect:

  • Increased earnings from our strategic investment in CF Nitrogen, primarily due to market conditions and strong demand for urea and UAN, factors that were partially offset by higher natural gas costs
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