CHS 1Q earnings off; fert unit has improved margins
CHS Inc. earnings for the period (Sept. 1 – Nov. 30, 2016) declined 22 percent from the same period of fiscal 2016. The decrease was primarily attributed to lower pretax earnings in the company’s Energy and Foods segments along with Corporate and Other. These declines were partially offset by increased pretax earnings in the CHS Ag segment as well as earnings from the new Nitrogen Production segment.
“We’ve been in business for nearly nine decades, so we’ve experienced these types of cycles before,” said CHS President and CEO Carl Casale. “Although it’s not possible to predict how long the current down cycle in the ag and energy industries will continue, we’ll navigate through this period by continuing to run our businesses efficiently and effectively, by maintaining a strong balance sheet and by ensuring we serve our owners’ and customers’ needs in all we do.”
The CHS Ag segment, which includes its domestic and global grain and crop nutrients businesses, renewable fuels, local retail operations and processing and food ingredients, generated income of $109.2 million, an increase of 58 percent over the same period a year ago. The wholesale crop nutrients business increased mainly due to increased margins. Country operations earnings increased because of increased grain volumes and other income, which was partially offset by loan loss reserves.
The Nitrogen Production segment generated income of $27.0 million before taxes during the first three months of the fiscal year. This increase in income was primarily driven by a gain of $29.1 million associated with an embedded derivative asset established due to the terms of our strategic investment in CF Industries Nitrogen LLC. There are no comparable results in the prior year as this segment represents the investment in CF Nitrogen, which occurred in February 2016.