CHS profit more than doubles in Q1

by Eric Schroeder
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ST. PAUL, MINN. — Net income at CHS Inc. more than doubled in the first quarter ended Nov. 30, 2007, jumping 121% to $300,900,000 from $136,379,000 in the first quarter of fiscal 2007. Earnings during the most recent quarter included a $91.7 million gain on the sale of stock in CF Industries Holdings Inc.

Revenues for the period also were higher, climbing 74% to $6,525,386,000 from $3,751,070,000 in the same period a year ago. Improved sales were driven by higher prices for grain and energy along with the inclusion of crop nutrients sales, which previously had been part of a joint venture.

The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $118,105,000 on sales of $3,835,251,000, up sharply from $38,488,000 and $1,804,616,000, respectively, in the first quarter of fiscal 2007.

"Our grain marketing operations improved earnings by $46.3 million during the three months ended Nov. 30 compared with the same three-month period in fiscal 2007, primarily from increased grain volumes and included strong earning performance from our joint ventures," CHS said. "Volatility in the grain markets creates opportunities for increased grain margins, and additionally during fiscal 2007 and 2008, increased interest in renewable fuels, and changes in transportation costs shifted marketing patterns and dynamics for our grain marketing business."

Earnings also were up significantly in CHS Processing operations, which include its oilseed processing, wheat milling, food production and renewable fuels operations. Operating earnings in the first quarter were $4,682,000, up from $605,000, while sales rose 57% to $243,296,000.

CHS said earnings from oilseed processing operations increased $2.7 million during the first quarter behind improved margins in refining operations, while earnings from wheat milling joint ventures posted improved earnings of $6.5 million.

Energy earnings decreased from a year ago, reflecting lower refining margins.

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