CHS profit down 53%, still fourth best on record

by Eric Schroeder
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ST. PAUL, MINN. — Net income at CHS Inc. in the year ended Aug. 31 fell to $381,407,000, down 53% from $803,045,000 in fiscal 2008. Despite the decline, John Johnson, president and chief executive officer, said CHS was pleased with the results, which were the fourth best in the company’s 80-year history.

“Many of our businesses achieved record or near-record performance in 2009,” he said.

Revenues for the period also declined, falling 20% to $25,729,916,000 from $32,167,461,000 in the same period a year ago. Decreased sales were attributed to lower values for the energy and grain commodities that make up the majority of CHS sales.

The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $73,074,000, down sharply from $568,327,000 in fiscal 2008.

Sales in the segment totaled $17,196,448,000, down 13% from $19,696,907,000 a year ago.

“A dramatic drop in crop nutrients prices combined with weather-driven lower demand resulted in significant losses due to reduced inventory levels,” CHS said. “Grain marketing and local retail operations both achieved strong performance due to continued global grain demand and successful use of market risk management tools.”

Earnings within CHS Processing operations, which include its oilseed processing, wheat milling, food production and renewable fuels operations, rebounded during the year. Operating earnings in fiscal 2009 were $4,081,000, which compared with a loss of $5,806,000 in fiscal 2008. Sales fell 12% to $1,142,636,000 from $1,299,209,000.

CHS said oilseed processing earnings decreased $14,500,000 during fiscal 2009 due to reduced margins and volumes in crushing operations, while wheat milling joint venture earnings in the year eased $19,000,000 as the result of reduced margins on products sold.

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