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CHS Reports Net Loss $45.2 Million in Third Quarter
USAgNet - 07/17/2017

CHS Inc., the nation's leading farmer-owned cooperative and a global energy, grains and foods company, reported a net loss of $45.2 million for the third quarter of its 2017 fiscal year, compared to net income of $190.3 million for the same period one year ago. Consolidated revenues for the third quarter were $8.6 billion, compared to $7.8 billion for the third quarter of 2016, representing a 10 percent increase.

"Despite the economic challenges in agriculture and energy, several of our underlying businesses are having a solid year," said CHS President and Chief Executive Officer Jay Debertin. "Unfortunately, we've experienced three negative one-time events this fiscal year that have resulted in charges leading to a loss in the third quarter and a significant earnings decline for the year to date. In response to these events, we are implementing measures to better identify risk management gaps in some of our processes and when necessary enhance our ability to effectively manage our risks."

Pretax income for the nine-month period ended May 31, 2017, was $40.0 million, compared to $407.9 million for the nine-month period ended May 31, 2016. The decrease is primarily the result of charges related to a Brazilian trading partner entering into bankruptcy proceedings under Brazilian law, loan loss reserve charges, of which a significant portion relate to a single large producer borrower, and asset impairment charges.

Revenues for the nine-month period ended May 31, 2017, were $24.0 billion, compared to $22.2 billion for the nine-month period ended May 31, 2016, an increase of 8 percent.

The CHS Energy segment experienced a loss before income taxes of $9.3 million for the three months ended May 31, 2017, compared to income before taxes of $109.4 million for the same period in fiscal 2016. Results were primarily due to significantly reduced refining margins and a $32.7 million charge incurred due to a cancelled capital project. The company's propane, transportation and lubricants businesses experienced decreases in earnings compared to the same period a year ago.

The CHS Ag segment, which includes domestic and global grain marketing and crop nutrients businesses, renewable fuels, local retail operations, and processing and food ingredients, generated a loss before income taxes of $221.2 million for the three months ended May 31, 2017, compared to income before taxes of $24.2 million for the same period in fiscal 2016. Grain marketing earnings decreased primarily due to a $230 million charge driven by a trading partner in Brazil entering bankruptcy proceedings under Brazilian law. The wholesale crop nutrients and renewable fuels businesses experienced decreases due to lower margins. The processing and food ingredients business earnings decreased primarily due to impairment charges taken on certain assets during the three months ended May 31, 2017. Country Operations earnings increased due primarily to increased volumes.

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