Lower margins in its energy and food businesses continued to burden CHS Inc. in the first quarter of its fiscal year.
The nation’s largest farmer-owned cooperative, based in Inver Grove Heights, reported net income of $209.2 million for the three months that ended Nov. 30 — about 22 percent less than the $266.5 million earned during the same period a year before. Revenue was $8 billion, up from $7.7 billion for the same period in fiscal 2016.
Company executives attributed most of the changes to the down cycle in the energy sector and “significantly reduced refining margins for two refineries,” in Kansas and Montana.
Earnings for CHS Energy fell to $70 million compared with $192.6 million in the same period a year ago, a 64 percent decline. The segment also saw lower earnings in the transportation business, while its lubricants business remained flat and propane earnings increased from the same period a year ago.
“We’ve been in business for nearly nine decades, so we’ve experienced these types of cycles before,” said CHS President Carl Casale.
The energy declines were partly offset by increased earnings in the CHS agriculture segment and from its new nitrogen production business.
The ag segment had income of $109.2 million during the quarter, up 58 percent over the same period a year ago. The segment includes domestic and global grain and crop nutrients businesses, renewable fuels, retail operations, and processing and food ingredients.
The nitrogen production business generated income of $27 million, representing the company’s investment in CF Nitrogen last February.
The coop’s foods segment had earnings of $10.7 million in the first quarter of 2017, a decrease of $7.7 million from the same time period in the previous year. That segment consists of CHS’ equity investment in food manufacturer and distributor Ventura Foods LLC.