Jan 06, 2022

CHS Reports Record First Quarter Earnings

Strong global demand, improved supply chain efficiency generate $452 million

CHS has released results for its first quarter ended Nov. 30, 2021.

The company reported record quarterly net income of $452 million compared to $69.7 million in the first quarter of fiscal year 2021. The significant improvement in earnings was largely driven by strong global demand across key businesses compared with lower demand during the same period a year ago as a result of the COVID-19 pandemic.

Fiscal 2022 first quarter highlights include:

  • Ag segment experienced robust global demand that drove commodity prices higher leading to a significant improvement in earnings compared to the same period during the prior year.
  • Strong demand and global market forces in the agronomy business resulted in improved earnings compared to the first quarter of 2021.
  • Refining margins were higher in the Energy segment and we also experienced more favorable pricing for Canadian crude oil which is processed by our refineries.
  • Equity earnings from the company's CF Nitrogen investment improved as a result of increased urea and urea ammonium nitrate pricing due to favorable market conditions.

"Our exceptionally strong financial performance in the first quarter of fiscal year 2022 reflects the support of local cooperatives and producers, as well as the hard work and dedication of our employees around the world, who remain focused on delivering superior value for our owners," says Jay Debertin, president and CEO of CHS.

"That support and hard work, along with the investments we continue to make in critical assets and technology advancements are leading to operational improvements and stronger customer engagement, which are driving earnings momentum."

Debertin says the company's Energy segment continues to see both margin and volume expansion driven by increased global demand.

"I remain positive for the year ahead as we continue to improve the customer experience and create efficiency gains throughout our expansive network, all of which is leading to increased market access, added value and sustainable growth for our local cooperative and farmer owners."

Energy
Pretax earnings of $69.2 million represent a $136.4 million increase versus the same period a year ago and reflect:

  • Improved market conditions in our refined fuels business led to increased earnings, driven by higher refining margins and more favorable pricing of heavy Canadian crude oil processed by our two CHS refineries.
  • Higher refining margins were partially offset by the higher cost of renewable energy credits compared to a year ago. Additionally, lower propane margins due to the reversal of unrealized hedging gains also impacted the first quarter of fiscal 2022.

Ag
Pretax earnings of $286.4 million represent a $203.4 million increase versus the same period a year ago and reflect:

  • Higher margins across all our Ag segment businesses resulted from strong global market conditions and robust demand for agronomy products, grains and oilseeds, soyoil and soymeal.
  • Lower volumes in the quarter were attributable to a smaller overall wheat crop due to drought conditions in some parts of the United States and the impact from Hurricane Ida on the Gulf Coast.

Nitrogen Production
Pretax earnings of $96.6 million represents a $92.1 million increase versus the same period a year ago and reflect:

  • Higher equity method income attributed to strong demand and increased prices of urea and urea ammonium nitrate which are produced and sold by CF Nitrogen.

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