CHS posts record 2011 earnings

by World Grain Staff
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ST. PAUL, MINNESOTA, U.S. — CHS Inc. reported on Nov. 14 earnings of $961.4 million for its 2011 fiscal year, the highest in the farmer-owned energy, grains and foods company's 80-year history.

Earnings attributed to CHS operations for fiscal 2011 (Sept. 1, 2010 – Aug. 31, 2011) increased 91% over the $502.2 million for fiscal 2010, representing profitability and, in some cases, record performance for CHS business operations. The earnings figure surpasses a previous record of $803 million set in fiscal 2008.

"While we celebrate record results for fiscal 2011, our greatest achievement this past year continued to be adding value for our producer and member cooperative owners who count on CHS as a source of energy and crop production inputs, a connection to domestic and global grain markets, and access to risk management tools," said Carl Casale, CHS president and chief executive officer.

Revenues for fiscal 2011 reached $36.9 billion, compared with $25.3 billion for fiscal 2010, reflecting continued higher values for the energy, grain and crop nutrients products that comprise the majority of CHS business. The previous record, also set in fiscal 2008, was $32.2 billion.

For the fourth quarter (June 1 – Aug. 31, 2011), CHS posted income of $206.5 million, compared with $154.1 million for the fourth quarter of fiscal 2010. Revenues for the quarter were $10.6 billion, up from $6.6 billion a year ago.

Earnings were led by the Energy segment, consisting of refined fuels, propane, renewable fuels marketing and lubricants. This was due primarily to improved margins from the refined fuels manufactured at the CHS Refinery at Laurel, Montana, U.S., and the National Cooperative Refinery Association of McPherson, Kansas, U.S., in which CHS owns nearly 75%. CHS renewable fuels marketing and distribution business also generated record earnings. The company's lubricants and propane businesses, while profitable, were down from fiscal 2010 performance.

CHS Country Operations, with its locally controlled retail locations, generated record earnings within the company's Ag Business segment, the result of higher grain volumes and increased margins. Other Ag Business components — grain marketing, crop nutrients and oilseed processing — also contributed income ahead of fiscal 2010. Ag Business earnings also reflect a pre-tax gain of $119.7 million on the CHS sale of its investment in Multigrain AG, a Brazil-based joint venture.

CHS reports results for its business services operations, as well as two food processing-related joint ventures, under the Corporate and Other category. CHS-owned insurance, risk management and financing businesses reported increased earnings for fiscal 2011, much of which was due to increased market volatility. The company recorded strong contributions from its 50% ownership of Ventura Foods, LLC, a vegetable oil-based food manufacturing business. The 24% CHS share of Horizon Milling, LLC, the nation's leading wheat miller, generated record returns primarily due to improved margins.

During fiscal 2011, CHS again provided a strong financial return to its owners — based on fiscal 2010 results — in the form of $227.3 million in cash patronage, equity redemptions and preferred stock dividends. In fiscal 2012, based on 2011 earnings, the company expects to return a record $421.0 million to its owners.
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