CHS earnings fall as part of 'global down cycle'

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Carl Casale, CHS Inc.
Carl Casale, president and c.e.o. of CHS Inc., said, “Our core businesses of agriculture and energy have entered a global down cycle, which affected both earnings and revenues for fiscal 2015."

ST. PAUL, MINN. — Net earnings at CHS Inc. for fiscal 2015 fell 28%, dragged down by what the company’s top executive called a “global down cycle.”

Net earnings for fiscal 2015 were $781 million, down from more than $1.1 billion in fiscal 2014, reflecting singular events as well as lower margins across CHS’ energy and agriculture businesses. Revenues for the year were $34.6 billion, down 19% from $42.7 billion for fiscal 2014, primarily due to lower values for the commodity energy and grains products it handles.

“Our core businesses of agriculture and energy have entered a global down cycle, which affected both earnings and revenues for fiscal 2015,” said Carl Casale, president and chief executive officer. “Nonetheless, we continue to fulfill our commitment to our owners by making significant investments in the future of our businesses, providing direct economic returns and maintaining a strong financial foundation for the future.”

CHS Ag segment earnings for fiscal 2015 also declined overall, driven primarily by a $116.5 million impairment associated with the decision to cease development of a nitrogen fertilizer plant at Spiritwood, N.D. In addition, grain marketing earnings decreased primarily as a result of robust logistical performance in fiscal 2014 that did not reoccur in fiscal 2015, as well as growth-related expenses and foreign exchange losses, which partially were offset by increased margins. Within the company’s Country Operations local retail, animal nutrition and sunflower businesses, earnings declined due to lower retail agronomy margins and growth expenses, but partially were offset by higher grain volumes and margins. CHS wholesale crop nutrients earnings increased in fiscal 2015 compared with fiscal 2014 due to increased margins partially offset by decreased volumes.

CHS renewable fuels marketing and production operations earnings also declined, primarily due to lower ethanol market prices and corresponding lower marketing commissions. The decrease partially was offset by additional production earnings from the company's two Illinois ethanol plants. CHS Processing and Food Ingredients fiscal 2015 earnings increased when compared with fiscal 2014. Fiscal 2014 earnings included an impairment related to its CHS Israel assets.

CHS reports results for its Business Solutions operations and two food processing-related joint ventures under the Corporate and Other heading. Overall earnings for fiscal 2015 declined when compared with fiscal 2014. Fiscal 2014 included a gain of $109.2 million associated with the formation of the Ardent Mills milling joint venture. Combined earnings for CHS Insurance, CHS Hedging and CHS Capital increased slightly in fiscal 2015, the company said.

Year-over-year earnings for the CHS Energy segment declined primarily due to significantly reduced refining margins resulting from major maintenance turnarounds at its Laurel, Mont., and McPherson, Kas., refineries. Earnings for the company's propane business also declined due to lower margins and demand for both fall 2014 crop drying and winter 2014-15 heating use. CHS lubricants business reported record earnings.

In fiscal 2015, based on fiscal 2014 earnings, CHS returned $533.8 million to its owners in cash patronage, equity redemptions, preferred stock and dividends on preferred stock to its owners.
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By Jason 12/14/2015 1:04:19 PM
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