CHS income rises 68% on ag business strength

by Eric Schroeder
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ST. PAUL, MINN. — Net income at CHS Inc. in the first quarter ended Nov. 30 totaled $201,725,000, up 68% from $119,950,000 in the first quarter of fiscal 2010. Revenues for the period also increased, rising 31% to $8,132,854,000 from $6,195,241,000 in the same period a year ago.

The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $145,123,000, up 60% from $90,499,000 in the first quarter of fiscal 2010. Sales in the segment totaled $5,539,226,000, up 48% from $3,742,631,000 a year ago.

“Earnings from our wholesale crop nutrients business improved $12.9 million for the three months ended Nov. 30, 2010, compared with the same period in fiscal 2010 mostly from increased volumes and improved margins,” CHS said in a Jan. 11 filing with the Securities and Exchange Commission. “Improved financial performance from our Agriliance investment resulted in a $3.2 million increase in earnings, net of allocated internal expenses. Our country operations earnings increased $30.2 million during the three months ended Nov. 30, 2010, compared to the same period in the prior year, primarily as a result of higher grain volumes and increased retail margins including from acquisitions made over the past year. Our grain marketing earnings increased by $12.7 million during the three months ended Nov. 30, 2010, compared with the same period in fiscal 2010, primarily as a result of improved volumes and margins.”

Earnings within CHS Processing operations, which include its oilseed processing, wheat milling, food production and renewable fuels operations, fell during the quarter. Operating earnings in the first quarter were $3,139,000, down 78% from $14,466,000, while sales rose to $283,173,000 from $264,099,000.

CHS said earnings from oilseed processing operations fell $10.2 million during the first quarter primarily due to reduced crushing and refining margins, as a result of increased soybean costs. Meanwhile, earnings from wheat milling joint ventures increased by $3.2 million. The company’s share of earnings from Ventura Foods, its packaged foods joint venture, decreased by $4.3 million during the quarter, primarily as a result of higher ingredient costs.

Energy earnings jumped to $57,223,000 from $13,970,000 during the first quarter. Sales were $2,392,742,000, up from $2,264,580,000.

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