CHS net, sales ease in first quarter

by Eric Schroeder
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ST. PAUL, MINN. — Net income at CHS Inc. in the first quarter ended Nov. 30 fell to $119,950,000, down 13% from $137,251,000 in the first quarter of fiscal 2009. Revenues for the period also fell, easing 20% to $6,195,241,000 from $7,733,919,000 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 $90,499,000, up sharply from $24,589,000 in the first quarter of fiscal 2009. Sales in the segment totaled $3,742,631,000, down 24% from $4,953,722,000 a year ago.

“Our grain marketing earnings increased by $23 million during the three months ended Nov. 30, 2009, compared with the same three-month period in fiscal 2009, primarily as a result of higher grain volumes, partially offset by slightly reduced earnings from our joint ventures,” CHS said in a Jan. 11 filing with the U.S. Securities and Exchange Commission. “Our country operations earnings increased $7.2 million during the three months ended Nov. 30, 2009, compared to the same period in the prior year, primarily as a result of higher grain volumes, in addition to overall increased margins mostly from acquisitions and improved crop nutrient margins.”

Earnings within CHS Processing operations, which include its oilseed processing, wheat milling, food production and renewable fuels operations, rose during the quarter. Operating earnings in the first quarter were $14,466,000, up 25% from $11,559,000, while sales fell to $264,099,000 from $310,890,000.

CHS said earnings from oilseed processing operations increased $1.8 million during the first quarter behind improved margins in refining operations, while earnings from wheat milling joint ventures increased by $800,000. The company’s share of earnings from Ventura Foods, its packaged foods joint venture, rose by $8.7 million during the quarter, primarily as a result of decreased commodity prices for inputs, improving margins on the products sold.

Energy earnings fell to $13,970,000 from $194,068,000 during the first quarter, reflecting the company’s lower margins on refined fuels at both its Laurel, Mont., refinery and NCRA refinery in McPherson, Kas. Sales were $2,264,580,000, down 11% from $2,550,552,000.

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