ST. PAUL, MINNESOTA, U.S. — Net income at CHS Inc. for the first quarter of fiscal 2020 decreased to $177.9 million compared to $347.5 million for the restated third quarter of fiscal 2019.
“We are not immune to the challenges of our industry, and our first-quarter results reflect the difficulties brought on by fall weather and ongoing trade tensions,” said Jay Debertin, president and chief executive officer of CHS Inc. “The cooperative system, however, provides CHS and its owners stability to withstand these difficult times. Our focus remains on building efficiencies in our supply chain and on operating in this challenging agricultural environment.”
Revenue for the first quarter fell slightly to $7.6 billion for fiscal 2020 from $8.5 billion in the first quarter of 2019.
The ag segment, which includes domestic and global grain marketing and crop nutrients, renewable fuels, local retail operations, and processing and food ingredients businesses, had a pre-tax loss of $13.9 million in the first quarter of 2020 compared to pre-tax earnings of 80.3 million in the first quarter of 2019. CHS attributed the loss to poor weather conditions, continued trade war between the U.S. and foreign trading partners and lower margins in its processing and food ingredients business.
In the first quarter, the co-op’s Corporate and Other segment had pre-tax earnings of $20.7 million, which compared with pre-tax earnings of $30.8 million in the first quarter of 2019. CHS said the decrease was due to lower equity income from its investments in Ardent Mills and Ventura Foods and decreased income in its financing and hedging businesses due to market-driven interest rate reductions and lower trading activity.
The Energy segments pre-tax earnings were $162.2 million in the first quarter of 2020, which compared with $232.5 million for the first quarter of 2019. CHS attributed the decrease to significantly less advantageous market conditions, driven by reduced crude oil spreads on heavy Canadian crude oil processed at its refineries and, to a lesser extent, decreased crack spreads at the co-op’s refined fuels business compared to the same period during fiscal year 2019.
“We know the remainder of fiscal year 2020 will continue to present challenges, and we are confident in our ability to find opportunities in those challenges, to help our owners grow their businesses and to continue to strengthen our company,” Debertin said. “No one feels those challenges more than our owners. We remain committed to supporting communities and experts as they address the stress felt across rural America.”