CHS second-quarter earnings drop 60%

by World Grain Staff
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ST. PAUL, MINNESOTA, U.S. — CHS Inc. on April 11 reported a 60% drop in second quarter income to $78.5 million compared to $194.6 million for the same period in 2011, reflecting reduced margins within a number of CHS business segments.

Second quarter earnings declined within Ag Business – which consists of crop nutrients, grain marketing, oilseed processing and the company's Country Operations locally controlled retail service centers. Product margins declined within CHS wholesale crop nutrients and grain marketing. Overall merchandise margins increased for retail operations, while grain margins decreased. This, combined with increased operating expenses from acquisitions and expansion, resulted in lower earnings. While the company's oilseed processing business reported improved margins, earnings decreased primarily from recent acquisition costs. Year-to-date, earnings for the Ag Business segment also declined over the same period in fiscal 2011.

In Energy, refining margins declined for both the CHS refinery at Laurel, Montana, U.S., and the National Cooperative Refinery Association, of which it owns nearly 75%. CHS propane and renewable fuels operations reported increased earnings. Energy segment earnings for the first six months of fiscal 2012 are ahead of the same period in fiscal 2011, largely due to higher refining margins during the first quarter of fiscal 2012.

Revenues for the quarter (Dec. 1, 2011 – Feb. 29, 2012) were $8.8 billion, compared with $7.7 billion for the second quarter of fiscal 2011.

Earnings through the second quarter (Sept. 1, 2011 – Feb. 29, 2012) of the 2012 fiscal year were $494.7 million, an increase of 25% over the $396.3 million for the first half of fiscal 2011. Revenues for the six-month period of fiscal 2012 were $18.6 billion, compared with $15.8 billion for fiscal 2011, reflecting higher values for the commodity energy, grain and crop nutrients products that comprise the majority of CHS business.



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