ST. PAUL, MINNESOTA, US — CHS, a US-based agribusiness cooperative, on April 5 posted an increase in net income during the second quarter of fiscal year 2023 boosted mainly by its energy segment, while earnings in its Ag segment declined from a historically high position from the same period a year ago.
The company reported quarterly net income of $292.3 million, which compared with $219 million in the second quarter of fiscal 2022. For the first six months of fiscal year 2023, the company posted net income of $1.1 billion and revenues of $24.1 billion, which compared with net income of $671 million and revenues of $21.2 billion recorded in the first half of fiscal year 2022.
“Strong global demand for commodities and improved market conditions for refined fuels led to increased earnings for the quarter, as well as the first half of the fiscal year,” said Jay Debertin, president and chief executive officer of CHS Inc. “The strength of our diversified portfolio offset margin pressures experienced within our Ag segment, particularly wholesale and retail agronomy products. Looking ahead, we will continue to invest on behalf of our owners in infrastructure, supply chain capabilities and innovative technology throughout our expansive global network to maximize value for our member cooperatives, farmer-owners and customers.”
The Energy segment saw pretax earnings of $264.8 million in the second quarter, nearly doubling earnings from the same quarter in 2022. CHS said “higher refining margins resulting from increased global demand, favorable pricing on heavy Canadian crude oil” was a factor in the increased net income as well as “higher propane margins driven by global markets and price volatility.”
CHS’ Ag segment saw pretax losses of $81.6 million in the quarter, representing a $136.7 million decrease compared to the same period in 2022. It noted that the lower margins were due to market-driven price decreases across most Ag segment categories, including wholesale and retail agronomy products and renewable fuels.
A reduction in oilseed processing margins due to the timing of the impact of mark-to-market adjustments also negatively impacted earnings, CHS said.
CHS’ earnings in the Ag segment over the six months ended Feb. 28, 2023, were $205.7 million, compared with $341.6 million in the first six months of fiscal 2022.
Pretax second-quarter earnings in CHS’ Nitrogen segment also saw a year-on-year decrease at $81.7 million, a $72.5 million decline from the prior year due to lower equity income from CF Nitrogen attributed to a decrease in urea and UAN selling prices.
The company recently announced several expansion projects that will impact the Ag segment. In January, CHS announced plans to begin construction this spring on a 1.1-million-bushel grain shuttle facility in southeast South Dakota, US, that ties into an existing rail loop used for the company’s agronomy operations. It also announced its intention to expand export capabilities of its joint venture, TEMCO LLC, with the addition of Cargill’s export terminal in Houston, Texas, US, which will provide additional shipping access for grains, oilseed and byproducts through the Port of Houston.