CHS Inc. reported a strong second-quarter ending Feb. 29 for its Ag segment, saying agronomy markets were stronger while grain and oilseed margins were stable. The segment reported pretax earnings of $56.9 million on revenues of $7.3 billion, up from the year-ago loss of $81.6 million and $9.1 billion, respectively.
Ag reported improved margins for wholesale and retail agronomy products due to improved market conditions, while grain and oilseed margins were up due to the timing impact of market adjustments. Wholesale crop nutrient sales volumes were up 12.2% to 1.54 million st from the year-ago 1.37 million st.
Lower prices were reported across the Ag segment, including agronomy, with lower urea and UAN prices cited. Grain and oilseed volumes were up due to improved efficiencies and a more balanced global supply and demand environment.
CHS said performance was solid across all segments, although earnings were down from the year-ago record quarter. CHS-wide net income was $170.3 million on revenues of $9.1 billion, down from $292.3 million and $11.3 billion, respectively.
“The first six months of our fiscal year have delivered overall good financial results,” said Jay Debertin, CHS President and CEO. “Our supply chain investments and well-diversified portfolio, empowered by our people and technology, are helping us perform well as we connect farmers and local cooperatives with the inputs and services they need to help feed the world.”
Second-quarter Nitrogen Production earnings were off at $37 million from $81.7 million. CHS said the decrease reflected lower equity income from CF Nitrogen, which was attributed to decreased urea and UAN prices.
Second-quarter Energy earnings dropped to $51.6 million on revenues of $1.87 billion, down from the year-ago $264.8 million and $2.31 billion, respectively. CHS cited decreased refining margins due to lower market prices and less favorable pricing on heavy Canadian crude oil, partially offset by a lower cost for renewable fuel credits.
Lower margins for propane were also reported due to global market conditions. There was reduced demand for propane and refined fuels, primarily driven by warm weather conditions across much of the trade territory.
CHS-wide six-month net income was $693.2 million on revenues of $20.5 billion, down from the year-ago record $1.1 billion and record revenues of $24.1 billion, respectively.
Six-month Ag income was up at $226.6 million on revenues of $16 billion versus the year-ago $205.7 million and $18.8 billion, respectively. Wholesale crop nutrient sales volumes were up 14.2%, to 3.41 million st from the year-ago 2.99 million st.
Six-month Nitrogen Production income was off at $73.5 million from the year-ago $178.6 million, while Energy dropped to $318.4 million on revenues of $4.8 billion, down from $661.4 million and $5.7 billion, respectively.
CHS plans a 69% increase in capital expenditures in fiscal 2024, to $953 million from 2023’s $654.5 million. It said the increase is for investment in infrastructure to meet the evolving needs of owners and customers, enhance value for the cooperative system, and propel sustainable growth. It said for the first six months of 2024 it has already acquired $346.1 million of property, plant, and equipment. However, major maintenance is expected to drop to only $20 million from $217.4 million due to significantly reduced turnaround activities at its refineries.