Losses at Agriliance LLC doubled during the first quarter ending Nov. 30, 2006, according to co-owner CHS Inc. Losses grew to $31.4 million on declining sales of $670 million, versus the year-ago loss of $15.7 million and $692.5 million.
Crop nutrient demand was off in 2006, said CHS. As a result, larger remaining inventories later in the year drove a significant decline in realizable value of inventories and reduced revenues. CHS said Agriliance actually saw slight margin increases in its retail operations and crop protection business.
CHS also revealed that it shed 25 percent of its stake in domestic fertilizer producer CF Industries Inc. during the quarter, reducing its ownership down to 2.9 percent. CHS sold 540,000 shares, which are included in the Ag Business segment, for $10.9 million, and recorded a pretax gain of $5.3 million.
Despite the downturn at Agriliance, CHS still posted a 68 percent increase in its Ag Business segment income before income taxes. They rose to $28.1 million from the year-ago $16.7 million. Strong grain movement for ethanol production was a major factor.
CHS-wide, net income was still down, at $136.3 million on sales of $3.8 billion from the year-ago $154.2 million and $3.5 billion, respectively. Most of the decline came from the Energy segment, reflecting lower margins for gasoline, diesel, and other refined products.