CHS records fifth year of higher earnings and sales

by Eric Schroeder
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ST. PAUL, MINN. — Higher values for energy, grains, crop nutrients and other commodities led to record earnings and revenues at CHS Inc. in fiscal 2008. Net income in the year ended Aug. 31 was $803,045,000, up 6% from $756,723,000 in fiscal 2007.

Revenues for the period, meanwhile, soared 87% to $32,167,461,000 from $17,215,992,000 in the same period a year ago.

The fiscal 2008 results marked the fifth consecutive year of higher income and revenues for CHS.

The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $448,464,000 on sales of $19,696,907,000, up sharply from $89,614,000 and $8,575,389,000, respectively, in fiscal 2007. CHS said its fiscal 2008 Ag Business earnings included a $91.7 million gain on the sale of the company’s remaining shares of CF Industries Holdings, Inc., a crop nutrients maker.

"Our grain marketing operations improved earnings by $183.7 million during fiscal 2008 compared with fiscal 2007, primarily from increased grain volumes and improved margins on those grains, and also included strong earnings performances from our joint ventures," CHS said. "Volatility in the grain markets creates opportunities for increased grain margins, and additionally during fiscal years 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 fiscal 2008 $32,176,000, up from $4,688,000, while sales rose to $1,299,209,000 from $754,743,000.

CHS said earnings from oilseed processing operations increased $23.5 million during the year behind improved margins in crushing operations, while earnings from wheat milling joint ventures rose $29 million. The company’s share of earnings from Ventura Foods, its packaged foods joint venture, fell $15.8 million during the year.

Energy earnings fell to $361,234,000 from $745,948,000 during fiscal 2008. Sales, meanwhile, rose 42% to $11,499,814,000.

As the year ended, CHS recorded a $71.7 million impairment on the value of its investment in VeraSun Energy Corp, an ethanol manufacturer that recently filed for reorganization under Chapter 11 bankruptcy. CHS owns approximately 8% of VeraSun.

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