CHS Inc. reported that its Ag Business unit’s Wholesale crop nutrient unit saw a 10 percent increase in fertilizer volumes for the third quarter ending May 31, 2010, compared to the year-ago quarter. The Ag Business unit was credited with helping to boost CHS third-quarter net income (GM, July 12, p. 8). Third-quarter Ag Business earnings were $94.6 million, versus the year-ago $23.6 million.
Third-quarter Wholesale crop nutrient revenues totaled $578.4 million, versus the year-ago $675.9 million. The decrease was due to lower average fertilizer prices somewhat offset by the higher volumes. The average sales price of all fertilizers sold reflected a $98/st drop (22 percent) versus year-ago levels.
Third-quarter earnings from the Wholesale unit were up $39.8 million from the year-ago quarter.
The Ag Business unit’s non-wholesale crop nutrient and non-grain business had third-quarter revenues of $762.9 million, up $59.4 million (8 percent) from year-ago levels. This reflected increased revenues in country operations from retail seed, energy, and crop protection products, partially offset by decreases in feed and sunflower products.
Country operations earnings increased $30.3 million versus the year-ago quarter, primarily as a result of improved retail crop nutrient and processed sunflower margins, in addition to overall increased margins related to higher volume, primarily attributed to acquisitions made over the past year.
Also during the quarter, CHS recorded a $10 million gain related to the sale of many of its Agriliance LLC locations. This, along with improved financial performance by Agriliance, resulted in a $10.9 million combined increase in earnings, net of allocated internal expenses.
Wholesale crop nutrient volumes were up 7 percent for the nine months ending May 31. Earnings improved $117.2 million, while revenues totaled $1.2 billion, down from the year-ago $1.6 billion. As with the third quarter, YTD was impacted by lower fertilizer prices, somewhat offset by higher volumes. The average sales price of all fertilizer sold reflected a decrease of $153/st (32 percent) versus the year-ago period.
Nine-month revenues from the non-grain and non-wholesale crop nutrient business were $1.4 billion, down $59.3 million from year-ago levels. This was primarily the result of decreased revenues in country operations retail crop nutrients and feed products business, partially offset by increased revenues from seed, crop protection, and energy products.
Nine-month country operations earnings increased $41 million, primarily as a result of improved grain margins and increased overall margins, mostly from acquisitions and improved retail crop nutrient margins.
In addition, during the period CHS recorded a gain related to the sale of Agriliance units of $23.7 million.
As of May 31, 2010, CHS reported that it had 253,000 st of crop nutrients under purchase contracts and 426,000 st under sales contracts, versus the year-ago 495,000 st for purchase contracts and 739,000 st for sales contracts.