CHS posts record fiscal 2012 earnings

by World Grain Staff
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ST. PAUL, MINNESOTA, U.S. — CHS Inc. reported on Nov. 7 record annual net income of $1.26 billion for 2012, the first time a U.S. agricultural cooperative has surpassed the $1 billion earnings mark.
Income was up 31% from the $961.4 million reported in 2011, which was also a record. Largely as a result of increased values for the energy, crop nutrients, grains and other commodities that comprise the majority of the company's business, CHS also set a new mark for revenues at $40.6 billion in fiscal 2012. That figure represents a 10% increase from the previous record of $36.9 billion, also set in fiscal 2011.
For the fourth quarter of fiscal 2012, CHS reported earnings of $360.9 million, compared with $206.5 million for the same period a year ago. Revenues for the fourth quarter of fiscal 2012 were $11 billion, compared with $10.6 billion for the final quarter of fiscal 2011.
The company's Ag segment earnings were led by record profitability for the CHS Country Operations unit. Earnings for Country Operations – which consists of local retail facilities, livestock nutrition and sunflower processing – were largely due to strong local crop nutrients movement and solid grain volume during fiscal 2012. The overall CHS crop nutrients business also recorded strong performance driven by significant product movement in spring 2012. The company's own grain marketing operations performed well under challenging fiscal 2012 market conditions, while processing and food ingredients results declined largely due to acquisition and investment expenses. Overall Ag segment earnings for fiscal 2012 declined from fiscal 2011 which included a pre-tax gain of $119.7 million on that year's sale of the CHS investment in Multigrain S.A., a Brazil-based joint venture.
"The strength of our diverse CHS business portfolio, along with a strong domestic and global footprint, combined in fiscal 2012 to allow us to successfully navigate continued market volatility and deliver record results for the U.S. farmers, ranchers and cooperatives who own us," said Carl Casale, CHS president and chief executive officer. "Continued strong performance has allowed CHS to invest in growing our business, maintain a strong balance sheet and – most important – return direct economic value to those who own this cooperative."
Based on fiscal 2012 earnings, CHS expects to return a record nearly $600 million in cash to its owners during fiscal 2013.
Strong petroleum refining margins at the company's refineries at Laurel, Montana, U.S., and McPherson, Kansas, U.S., helped drive record performance within the Energy segment which led overall CHS earnings. CHS also reported strong performance for its propane, and transportation businesses, while lubricants and renewable fuels marketing results were behind those of fiscal 2011.
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