CHS Inc., St. Paul, reported net income of $829.9 million on revenues of $31.9 billion for the fiscal year ending Aug. 31, 2019, compared to the year-ago $775.9 million and $32.7 billion, respectively. CHS saw upticks in earnings from its Energy and Nitrogen Production (CF Nitrogen stake) segments, though Ag, which includes wholesale and retail fertilizer operations, was down 42 percent.
“We are pleased with our results on behalf of our owners in fiscal year 2019. We focused on our priorities, built on our strategies, continued to improve our control environment, and leveraged the strength of our supply chain to deliver value to the farmers and co-ops that own us,” said Jay Debertin, CHS President and CEO.
“Improving customer experience and innovations led to better results including increased diesel production at our refinery in McPherson, Kansas. Our acquisition of the remaining 75 percent interest in West Central Distribution (WCD) (GM March 15, p. 1) that we previously didn’t own expanded our distribution channels and grew market access in agronomy,” he continued.
“When flooding made major river ways impassable, we leveraged our supply chain to reposition fertilizer to ensure our cooperatives and customers had the crop nutrients they needed for spring planting,” he said. “We identified new markets for our owners’ grain to help them navigate the difficult trade situation. And we began construction on a fertilizer storage facility in North Dakota and a grain shuttle loader in Minnesota. In each of these, the driving force was to be our customers’ first choice.
“We know the headwinds agriculture faced in fiscal year 2019 have carried over to fiscal year 2020, and CHS feels those same challenges,” Debertin added. “No one, however, feels them more and understands the impact more than the farmers and cooperatives that own us. We remain focused on delivering value to our owners and creating connections to empower agriculture. And we’re committed to continuing to raise our owners’ voices to policymakers and elected officials and identifying opportunities to continue to build our business, leveraging our supply chain and helping our owners navigate fluctuating markets.”
FY Ag pretax income was $43 million, down from the prior year $74.3 million. CHS cited poor weather conditions, including flooding, as well as ongoing global trade issue between the U.S. and foreign trading partners, which resulted in generally decreased margins and volumes across most of the segment. The Ag decrease was partially offset by increased crop nutrient prices, as well as the acquisition of the remaining 75 percent of WCD which was added to the CHS agronomy business in March. CHS said the purchase, from March 1, resulted in a $456.2 million increase in revenues. CHS paid $106.7 million for the WCD stake.
Overall FY Ag revenues were off at $24.7 billion from the prior year $25 billion.
CHS reported FY pretax income of $72.9 million from its Nitrogen Production, compared to the prior year $38.8 million. This was from the CHS equity investment in CF Nitrogen, with CHS citing increased urea and UAN prices. In addition, CHS said the CF Nitrogen investment distributed $186.5 million in cash to CHS during the fiscal year.
Energy pretax income was up at $618.2 million from the prior year $452.1 million, with CHS citing improved market conditions in refine fuels, primarily driven by favorable pricing on heavy Canadian crude oil, which is processed at CHS refineries in Laurel, Montana and McPherson, Kan. Energy revenues were off at $7.12 billion from the prior year $7.59 billion.