One-time items push CHS into loss column
Three one-time events pushed CHS Inc.’s third-quarter results into the loss column for the quarter ending May 31, 2017. CHS reported a net loss attributable to CHS of $45.2 million on revenues of $8.6 billion, down from the year-ago income of $190.3 million and $7.8 billion, respectively.
“Despite the economic challenges in agriculture and energy, several of our underlying businesses are having a solid year,” said CHS President and CEO Jay Debertin. “Unfortunately, we’ve experienced three negative one-time events this fiscal year that have resulted in charges leading to a loss in the third quarter and a significant earnings decline for the year to date. In response to these events, we are implementing measures to better identify risk management gaps in some of our processes and when necessary enhance our ability to effectively manage our risks.”
CHS said the decrease is primarily the result of charges related to a Brazilian trading partner entering into bankruptcy proceedings under Brazilian law, loan loss reserve charges, of which a significant portion relate to a single large producer borrower, and asset impairment charges.
In the CHS Ag segment, grain marketing earnings decreased primarily due to a $230 million charge driven by the Brazil bankruptcy. The wholesale crop nutrients and renewable fuels businesses experienced decreases due to lower margins. The processing and food ingredients business earnings decreased primarily due to impairment charges taken on certain assets. Country Operations earnings increased due primarily to increased volumes.
The Nitrogen Production segment generated income of $8.7 million during the third quarter, compared to $25 million during the same period last year. The decrease is primarily due to lower production margins.
CHS nine-month net income was $178.5 million down from the year-ago $425.8 million. Revenues were $24 billion, up from $22.2 billion.