CHS Inc. reported net income of $782.6 million on sales of $12.8 billion for the first-quarter ending Nov. 30, 2022, up 73.1% from the year-ago $452 million and $10.9 billion, respectively. The Energy segment saw a significant increase in pretax earnings compared to year-ago results. Ag and Nitrogen Production earnings were up, but relatively flat compared to year-ago figures.
“The US agricultural industry has benefited from ongoing strong global demand for grain and oilseed commodities,” said Jay Debertin, CHS President and CEO. “Our continued strong earnings are attributable to market dynamics and supported by our investments on behalf of our owners in infrastructure, supply chain capabilities, and innovative technology that drive efficiency and operational improvements. As we enter 2023, CHS remains well-positioned to maximize value for our member cooperatives, farmer-owners and customers.”
Nitrogen Production pretax earnings were up slightly, to $96.9 million from the year-ago $96.6 million. CHS said the increase reflects continued favorable performance of its strategic investment in CF Nitrogen due to strong global demand for urea and UAN.
Ag pretax earnings were $287.3 million on sales of $9.63 billion, up from the year-ago $286.4 million and $8.57 billion, respectively. CHS reported strong global demand and constrained supply for grain and oilseed. It said there were improved margins in oilseed processing due to robust demand, as well as mark-to-market gains.
The cooperative said there were lower margins on grain and oilseed commodities, driven by unfavorable mark-to-market impacts, as well as less favorable pricing for wholesale agronomy products, which experienced less favorable pricing due to global market conditions.
CHS saw decreased volumes across most of the Ag segment due to numerous factors, including drought conditions in portions of its trade territory. Decreased volumes in grain and oilseed, feed and farm supplies, wholesale agronomy, and renewable fuels product categories contributed to $304.7 million, $215.8 million, $147.7 million, and $110.0 million decreases in revenues, respectively.
Wholesale crop nutrient volumes were down 11.6%, to 1.612 million st from the year-ago 1.823 million st.
Energy pretax earnings were $396.6 million on sales of $3.11 billion, up from the year-ago $69.2 billion and $2.30 billion, respectively. CHS cited improved refined fuels market conditions, including higher refining margins and discounts on heavy Canadian crude oil, partially offset by higher renewable energy credit costs and increased refinery maintenance expenses.
It said higher refined fuels and propane volumes were driven by strong demand due to more favorable weather conditions during the fall harvest compared to the year-ago quarter. However, lower propane margins resulted from hedging-related impacts due to volatile pricing in the quarter.