CHS Inc. reports earnings increase

by World Grain Staff
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ST. PAUL, MINNESOTA, U.S. — CHS Inc. reported on Jan. 11 net income from company operations of $201.7 million for the first quarter of its 2011 fiscal year.

For the quarter (Sept. 1 – Nov. 30, 2010), the $201.7 million in net income attributable to CHS operations was a 68% percent increase over earnings of $120 million for the same period of fiscal 2010. Revenues for the quarter were $8.1 billion, up from $6.2 billion for the first quarter of fiscal 2010, reflecting higher average values for the energy, grains and oilseeds, crop nutrients and processed oilseed products the company handles.

Earnings for the first quarter of fiscal 2011, compared with the same quarter for fiscal 2010, represented improved refined fuels margins for the company's wholly owned Laurel, Montana, U.S., refinery and the National Cooperative Refinery Association, McPherson, Kansas, U.S., of which it owns nearly 75%. Earnings also increased for CHS renewable fuels marketing and its transportation operations, but declined within its propane, lubricants and energy equipment businesses.

The company's ag business segment recorded increased volumes and earnings during the first quarter of fiscal 2011, primarily driven by stronger global grain demand which boosted CHS grain marketing, crop nutrients and local retail business performance.

Year-over-year earnings for the CHS processing segment declined in the first-quarter of fiscal 2011 primarily due to the company's own reduced oilseed crushing and refining margins resulting from higher soybean costs. Earnings generated by the company's ownership in the Ventura Foods, LLC, vegetable oil-based foods joint venture declined primarily due to higher ingredient costs, while the CHS share of earnings from the Horizon Milling, LLC, wheat milling joint venture increased as a result of higher product margins.

Increased financial and hedging activity resulted in higher year-over-year earnings in the first quarter of fiscal 2011 for CHS financing and hedging businesses in its business solutions area, while earnings from insurance services declined. Those earnings are recorded under corporate and other.
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