CHS Inc. reported net earnings attributable to CHS of $120 million on sales of $6.2 billion for the first quarter ending Nov. 30, 2009, versus the year-ago $137.3 million and $7.7 billion. Net income was $122.5 million, versus the year-ago $159.4 million.
The Ag Business segment, which includes crop nutrients, reported first-quarter income before income taxes of $91.7 million on sales of $3.74 billion for the quarter, up from the year-ago $19.8 million and $4.95 billion.
CHS said that while wholesale crop nutrient revenue was down in the first quarter, earnings were up by $39.5 million. Revenues from this unit dropped some $352.2 million, or 56 percent, during the quarter, to $281.1 million from the year-ago $633.6 million. Of the drop, some $309.4 million was due to decreased average fertilizer selling prices, while $43.1 million was due to decreased volumes. The average fertilizer price decline was a whopping $348 per ton, or 52 percent. Volumes were off only 7 percent.
The unit was in the plus column for the first quarter. CHS did not list actual operating income from CHS wholesale crop nutrients; however, once the cost of goods for the quarter is subtracted – $268.2 million from sales of $281.1 million – the result is $12.9 million. For the year-ago period, cost of sales were $656.2 million on sales of $633.6 million, for a negative $22.6 million. CHS also took a $56.8 million writedown on market adjustments for crop nutrients for the year-ago quarter, which was part of an overall $84.1 million adjustment (GM Jan. 19, 2009). CHS confirmed year-ago crop nutrient loss for the unit and attributed it mainly to the writedown.
CHS country operations earnings, which include grain elevators and retail centers, were up by $7.2 million in the first quarter. CHS cited higher grain volumes, acquisitions, and improved crop nutrient margins for this increase.
As of Nov. 30, 2009, CHS crop nutrient inventories were valued at $112.4 million, versus the year-ago $346.7 million. They were valued at $114.8 million as of Aug. 31, 2009. Also as of Nov. 30, CHS had 909,000 st of product under purchase contract and 804,000 st under sales contracts.
As of Dec. 31, 2009, CHS noted that Agriliance LLC had sold most of its assets, with no sales contracts pending. Major assets still to be sold included some in Florida associated with its ProSource One specialty agriculture business.
During the first quarter ending Nov. 30, CHS received $40 million as cash distribution from Agriliance as a return of capital, primarily from the sale of ag retail outlets. It received another $30 million in December 2009.
The CHS Processing segment saw a turnaround in the first quarter, with income before income taxes of $30.8 million, up from a year-ago loss of $52.7 million. Energy saw a huge drop, to $14.3 million from the year-ago $206.8 million.