CHS: co-op reports 2023 second quarter earnings

St. Paul / MN. (chs) CHS Inc., the United States’ leading agricultural co-op and a global energy, grains and foods company, released results for its second quarter ended Feb. 28, 2023. The company reported quarterly net income of USD 292.3 million compared to USD 219.0 million in the second quarter of fiscal year 2022. For the first six months of fiscal year 2023, the company reported net income of USD 1.1 billion and revenues of USD 24.1 billion compared to net income of USD 671.0 million and revenues of USD 21.2 billion recorded in the first half of fiscal year 2022. Fiscal 2023 second quarter highlights include:

  • Revenues of USD 11.3 billion compared to USD 10.3 billion in the second quarter of fiscal year 2022, a year-over-year increase of 9 percent.
  • Strong refining margins and market conditions in our refined fuels business drove significantly improved earnings in our Energy segment.
  • Decreased prices for agronomy products and ethanol contributed to lower earnings in our Ag segment.
  • Our CF Nitrogen investment delivered solid earnings due to strong global demand for urea and UAN, although selling prices for those products have decreased.

«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 CEO 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.»

Energy

Pretax earnings of USD 264.8 million for the second quarter of fiscal year 2023 represent a USD 254.0 million increase versus the prior year period and reflect:

  • Higher refining margins resulting from increased global demand, favorable pricing on heavy Canadian crude oil and improved market conditions for refined fuels
  • Higher propane margins driven by global markets and price volatility
  • Higher prices for renewable energy credits that partially offset higher margins

Agriculture

Pretax losses of USD 81.6 million represent a USD 136.7 million decrease in earnings versus historically strong earnings in the prior year period and reflect:

  • Lower margins 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

Nitrogen Production

Pretax earnings of USD 81.7 million represent a USD 72.5 million decrease versus the prior year period due to lower equity income from CF Nitrogen attributed to a decrease in urea and UAN selling prices.

Corporate and Other

Pretax earnings of USD 48.0 million represent a USD 37.5 million increase versus the prior year period and reflect increased interest income resulting from higher interest rates, as well as improved equity income from our Ventura Foods joint venture, which experienced more favorable market conditions for edible oils.

CHS Inc. income (loss) before income taxes by segment

(USD in thousands) 3M Ended February 28, 6M Ended February 28,
2023 2022 2023 2022
Energy USD 264,822 USD 10,832 USD 661,416 USD 80,021
Ag (81,566) 55,181 205,733 341,606
Nitrogen Production 81,733 154,257 178,606 250,840
Corporate and Other 48,033 10,557 84,737 25,023
Income before income taxes 313,022 230,827 1,130,492 697,490
Income tax expense 20,974 11,931 55,528 26,651
Net income 292,048 218,896 1,074,964 670,839
Net (loss) income attributable to noncontrolling interests (273) (104) 45 (122)
Net income attributable to CHS Inc. USD 292,321 USD 219,000 USD 1,074,919 USD 670,961

As a leading global agribusiness and the largest farmer-owned cooperative in the United States, CHS serves customers in 65 countries and employs nearly 10,000 people worldwide. We provide critical crop inputs, market access and risk management services that help farmers feed the world. Our diversified agronomy, grains, foods and energy businesses recorded revenues of USD 47.8 billion in fiscal year 2022. We advance sustainability through our commitment to being stewards of the environment, building economic viability and strengthening community and employee well-being.