CHS income and sales drop sharply in Q2

by Eric Schroeder
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ST. PAUL, MINN. — Net income at CHS Inc. in the second quarter ended Feb. 28 fell to $82,280,000, down 51% from $168,031,000 in the second quarter of fiscal 2008.

Revenues for the period also declined, falling 25% to $5,177,069,000 from $6,891,345,000 in the same period a year ago. Decreased sales were attributed to lower values for many of the grain, refined fuels and crop nutrients products CHS markets.

The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $22,387,000, down sharply from $118,005,000 in the second quarter of fiscal 2008. Sales in the segment totaled $3,416,515,000 in the most recent quarter, down 20% from $4,273,984,000 a year ago.

"The average sales price of all grain and oilseed commodities sold reflected a decrease of $1.27 per bushel over the same three-month period in fiscal 2008," CHS said in an April 9 filing with the Securities and Exchange Commission. "The 2008 fall harvest produced good yields throughout most of the United States, with the quality of most grains rated as good. The average month-end market price per bushel of spring wheat, soybeans and corn decreased $7.67, $3.90 and $1.22, respectively. Volumes decreased 7% during the three months ended Feb. 28, 2009, compared with the same period of a year ago."

Earnings within CHS Processing operations, which include its oilseed processing, wheat milling, food production and renewable fuels operations, also fell during the quarter. Operating earnings in the second quarter were $1,061,000, down from $9,886,000, while sales fell 7% to $270,628,000 from $290,049,000.

CHS said earnings from oilseed processing operations decreased $25.2 million during the second quarter, of which $19.7 million was due to a 12% decrease in sales volume and $5.5 million was related to lower average sales prices.

Energy earnings rose to $94,007,000 from $52,580,000 during the second quarter. Sales, meanwhile, fell to $1,546,147,000 from $2,399,044.

For the six months ended Feb. 28, CHS posted net income of $219,531,000, down 53% from $468,931,000. Sales eased to $12,910,988,000 from $13,416,731,000.

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