CHS Inc., Inver Grove Heights, Minn., has released results for the third quarter ending May 31, 2022, showing net income of $576.6 million and revenues of $13.1 billion, compared to the year-ago net income of $273.6 million and revenues of $10.9 billion. Nine-month net income was $1.2 billion and revenues $34.4 billion, up from the year-ago $305 million and $28 billion, respectively.
“Global grains and oilseed market demand remained strong throughout the third quarter,” said Jay Debertin, CHS President and CEO.
“Decreased global supply due to geopolitical factors, supply chain disruptions, and market volatility also contributed to increased earnings.
“The ongoing war in Ukraine has resulted in significant uncertainty and contributed to ongoing volatility across global energy markets,” he added. “We are leveraging our U.S. refineries to reliably meet the energy needs of CHS customers.”
As for Ukraine, CHS, which does business and has employees in the country, provided an update. It said its operations were dramatically disrupted by the war, and some of the company’s employees have been forced to relocate to other countries and within Ukraine, with many unable to perform all or some work duties.
While the company said that it does not have significant fixed assets or infrastructure in Ukraine, it continues to have grain inventory in various facilities, with the ability to access those limited, which has resulted in an impairment of a portion of those grain inventories.
However, CHS said that it was able to sell limited amounts of Ukrainian inventory during the quarter ending May 31, which reduced its inventory position to approximately $22.5 million.
In the Ag segment, CHS said processing and agronomy businesses delivered another strong quarter, building on momentum that began earlier in the fiscal year. Energy segment refining margins were higher, driven by robust demand across global energy markets and favorable pricing for Canadian crude oil, which is processed by CHS refineries.
CHS noted that certain of its equity method investments continued to perform exceptionally well, including the CF Nitrogen investment, which was driven by strong global demand for urea and UAN.
CHS reported third-quarter Ag pretax earnings of $273.7 million on revenues of $10.4 billion, up from the year-ago $140.1 million and $9.2 billion, respectively. The company said the increase in Ag revenues reflected the higher pricing attributed to market-driven price increases across most of the segment’s product categories during the quarter, including a $771.7 million increase for wholesale agronomy product revenues resulting from strong global market demand and global supply disruptions.
However, CHS said wholesale agronomy saw decreased volumes during the quarter due to less-than-favorable weather conditions during the spring planting and application season compared to last year.
Nine-month Ag income was $615.3 million on revenues of $27.2 billion, up from the year-ago $237.2 million on revenues of $23.6 billion.
Income from the CHS stake in CF Nitrogen was $178.2 million, up from the year-ago $46.6 million. Nine-month income was $429.1 million, up from the year-ago $62.3 million.
Energy income climbed to $163.2 million on revenues of $2.94 billion, from the year-ago $4.96 million and $1.82 billion, respectively. Nine-month Energy income was $243.3 million on revenues of $7.6 billion, up from the year-ago loss of $116.9 million and $4.6 billion, respectively.