July 14, 2008

 

CHS earnings down 21 percent in third quarter due to energy business

 
 

Major US cooperative company CHS Inc. has reported a 21 percent drop in net income in the third quarter despite seeing most sectors turning out improved performance. 

 

The company, which deals with agricultural supply, energy, and grain-based foods, raked in US$189 million in net income in the third quarter ended May 31. This is down from US$240 million during the same period last year.

 

However, improved sales due to higher commodity prices pushed up revenues for the period from US$4.73 billion to US$9.34 billion, an increase of 97 percent.

 

In the Ag Business segment, the company reported a sharp increase in earnings of US$65.5 million in the third quarter this year as compared to that of fiscal 2007. This sector handles agronomy, grain marketing and retail operations.

 

CHS said that their grain marketing operations generated more earnings mainly because of increased grain volumes and greater margins on grains, as well as robust performances from joint ventures.

 

CHS Processing, which includes oilseed processing, wheat milling, food production and renewable fuels operations, also reaped better earnings. Operating earnings multiplied more than four-fold from US$7.1 million to US$ 29.2 million, while sales rose by US$360 million to US$887 million.

 

Earnings from oilseed processing increased by US$13.4 million during the third quarter. Wheat milling joint ventures had improved earnings of US$6 million despite a US$6.5 million drop in earnings from the company's packaged foods joint venture, Ventura Foods.

 

However, the energy businesses saw earnings plunge by US$207 million to US$29 million in spite of a 40-percent increase in sales.

 

CHS Inc. is an integrated agricultural cooperative company based in Minnesota with major footholds in a diverse range of businesses. With a five percent of market share in the US soy oil market and soy crushing operations, CHS is also prominent in the energy industry as the largest propane wholesalers in the US. The company also produces consumer food products and other food ingredients from agricultural commodities for sale in the retail market.

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