All Posts from November 6, 2014

CHS reports 2nd best annual earnings

Breaking Industry News

CHS Inc. announced earnings for fiscal 2014 of $1.1 billion, the second highest in its history. CHS said earnings for fiscal 2014 (Sept. 1, 2013 – Aug. 31, 2014) were $1.1 billion, up 9 percent over $992.4 million for fiscal 2013, reflecting strong energy earnings, global agricultural expertise and record local retail operations performance.

Revenues for the year were $42.7 billion, down 4 percent from $44.5 billion for fiscal 2013, primarily due to lower values for commodities the company handles, including refined fuels, grain and oilseeds.

"Even as we experienced an overall softening of the global agriculture and energy sectors during fiscal 2014, CHS continued to focus on and deliver what it does best – value that helps our farmer- and cooperative-owners grow," said Carl Casale, president and CEO. "We fulfilled that commitment by continuing to make significant investments in the future of our businesses; providing significant direct economic returns and maintaining a strong financial foundation for the future."

CHS said its Ag segment earnings for fiscal 2014 increased, reflecting the company’s core competencies in logistics and risk management which enabled it to maximize volumes and earnings for its global grain marketing and wholesale crop nutrients operations. In addition, significant crop inputs and services business, along with strong grain margins, contributed to record earnings for CHS Country Operations local retail, animal nutrition and sunflower businesses.

Year-over-year earnings for the CHS Energy segment declined during fiscal 2014, due to lower refining margins for much of the year for the company’s two refineries. The segment also included record performance for other energy businesses, including propane, lubricants, renewable fuels marketing and transportation.

CHS Processing and Food Ingredients business earnings declined in fiscal 2014, compared with 2013, primarily due to non-cash asset impairment charges.

CHS reports results for its business services operations and two food processing-related joint ventures under the Corporate and Other heading. Overall earnings increased in fiscal 2014 compared with the previous year. Combined earnings for CHS insurance, risk management and financing businesses declined in fiscal 2014 compared with fiscal 2013, largely due to market volatility and commodity prices which affected borrowing and hedging activity. Earnings contributions to CHS for fiscal 2014 reached high marks for the company’s 50 percent ownership of Ventura Foods, LLC, a vegetable oil-based food manufacturing business, and its 12 percent share of Ardent Mills, a wheat milling venture. CHS recorded a $109.2 million gain associated with formation of Ardent Mills in May 2014.

In fiscal 2014, based on fiscal 2013 earnings, CHS returned a record $637.2 million to its owners in cash patronage, equity redemptions, preferred stock and dividends on preferred stock to its owners. This included a one-time retirement of $200 million in qualified owner equity with preferred stock.

CF 3Q earnings off, volumes up

Breaking Industry News

CF Industries Holdings Inc. reported third-quarter net earnings attributable to common shareholders of $130.9 million ($2.62 per diluted share) on sales of $921.4 million compared to the year-ago $234.1 million ($4.07 per share) and $1.1 billion, respectively.

CF said a 6 percent increase in nitrogen volumes during the third-quarter (half of which was contracted to The Mosaic Co.) was partially offset by marginally lower realized prices.

“The continuing strong fundamentals of our business were masked as higher natural gas costs worked their way through inventory and into the cost of goods sold and several third quarter specific items impacted our results,” said CF President and CEO Tony Will. “While our business is subject to quarter-to-quarter volatility due to the impact of weather dynamics on our input costs and timing of end-user behavior, its long term cash flow characteristics are relatively stable and enduring. Steadily growing nitrogen demand, an advantaged position on the global nitrogen cost curve, a competitive set of distribution assets and a focused management team provide confidence in our strong long-term cash flow generation capacity. Our strategy to increase capacity and return capital to shareholders remains sound, and we are committed to maintaining our disciplined focus on its execution.”

Will noted that natural gas prices have moderated and the company has locked in 90 percent of its supplies through first-quarter 2015 at an average floor price of $3.41/mmBtu and ceiling of $4.25/mmBtu.

The company also sees robust nitrogen demand in 2015, with corn acreage of 90 million acres.

CF year-to-date earnings remained just ahead of year-ago. Nine-month earnings were $1.15 billion ($22.16 per share) on sales of $3.53 billion, up from the year-ago $1.14 billion ($19.01 per share) on sales of $4.15 billion.

Agrium eyes cuts, more divestment

Breaking Industry News

Agrium Inc. said during its Investor Day Nov. 6 that it plans to cut some 500 employees and find some $475 million in savings at the company by 2017. While Agrium is in the process of cutting some 500 jobs, it told Green Markets that much of that goal has already been met, via the sale of the Turf and Ornamental business and the discontinuation of the Advanced Technologies business unit. In addition, Agrium has already cut jobs in its Phosphate and Purchase for Resale businesses. [italicized revision – 11/06/14 11:50ET]

Agrium also said it will continue to sell underperforming or non-core businesses. Still to be rationalized this year is the company’s Direct Solutions business segment. Also included on this list to divest are micronutrients, the European UAN business, and the purchase for resale business.

PotashCorp to pay penalty, upgrade plants

Breaking Industry News, Sulfuric Acid

In a settlement with the United States, three subsidiaries of the Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, will take steps to reduce harmful air emissions at eight U.S. production plants, the U.S. Environmental Protection Agency (EPA) and Department of Justice announced today. The settlement resolves claims that these PotashCorp subsidiaries violated the Clean Air Act when they modified facilities in ways that released excess sulfur dioxide into surrounding communities.

The settlement requires PCS Nitrogen Fertilizer, AA Sulfuric Inc., and White Springs Agricultural Chemicals Inc. to install, upgrade and operate state-of-the-art pollution reduction measures, as well as install emissions monitors at eight sulfuric acid plants across facilities in Geismar, Louisiana
(one plant), White Springs, Florida (four plants), and Aurora, North Carolina (three plants).  The three companies will spend an estimated $50 million on these measures, and will pay a $1.3
million civil penalty.

EPA expects the actions that the companies have agreed to take will reduce harmful emissions by over 13,090 tons per year, which includes approximately 12,600 tons per year of sulfur dioxide, 430 tons per year of ammonia and 60 tons per year of nitrogen oxide.  In the future, the companies can also retire
plants to comply with the settlement.

The settlement also includes a “supplemental environmental project,” estimated to cost between $2.5-$4 million, to protect the community around a PCS Nitrogen nitric acid plant in Geismar, Louisiana, and requires PCS Nitrogen to install and operate equipment to reduce emissions of nitrogen oxide and
ammonia. This project is part of EPA’s commitment to advancing environmental justice by reducing the disproportionate environmental impacts on communities near industrial facilities
– in this instance, by reducing fine particulates that can aggravate respiratory disease.

EPA says sulfur dioxide, the predominant pollutant emitted from sulfuric acid plants, has numerous adverse effects on human health and is a significant contributor to acid rain, smog and haze.  Sulfur dioxide–along with nitrogen oxide–is converted in the air to particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death.

This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes acid production plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements. It is the 10th settlement reached under EPA’s National Acid Manufacturing Plant Initiative and the 7th settlement addressing pollution from sulfuric acid plants. Today’s settlement covers more sulfuric acid production capacity–roughly 24,000 tons per day or approximately 14 percent of total U.S. capacity–than all previous sulfuric acid settlements under this initiative combined.

The settlement also resolves alleged violations based on Louisiana law at the Geismar, Louisiana, facility, and the Louisiana Department of Environmental Quality will receive $350,000 of the $1.3 million penalty.

The settlement was lodged with the U.S. District Court for the Middle District of Louisiana and is subject to a 30-day public comment period and final court approval.

PotashCorp said it chose to cooperate with authorities rather than litigate, and noted that other major producers have gone through this same process.

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