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CHS Inc. Achieves $170.3 Million Net Income in Q2 Despite Market Challenges


Michael Chen

April 3, 2024 - 15:22 pm


Robust Agricultural Business Boosts CHS Inc. with $170.3 Million in Q2 Income Amidst Market Swings

ST. PAUL, Minn., April 3, 2024 /PRNewswire/ -- CHS Inc., a leading agribusiness cooperative in the United States and a significant figure on the global agricultural stage, has publicized its financial outcomes for the second quarter ending February 29, 2024. The company has reported a solid net income of $170.3 million on revenues of $9.1 billion. In comparison, during the same quarter last year, the net income stood at a higher $292.3 million with revenues reaching $11.3 billion. Over the first six months of the fiscal year 2024, the cooperative accumulated a net income totaling $693.2 million and revenues of $20.5 billion, a slight decrease from the prior year's first half, which saw record net income of $1.1 billion on record revenues of $24.1 billion.

A Closer Look at Q2: Key Performance Indicators

Despite the noticeable decline from the record-breaking second quarter of the fiscal year 2023, the company saw commendable performance across several business sectors. The Agriculture segment enjoyed uplifted earnings, fueled by stronger agronomy markets and stable grain and oilseed margins when set against the previous year. Conversely, the Energy segment suffered diminished margins following a historic warm winter and fluctuating market conditions.

Continuing the trend of effective financial management, the cooperative's equity method investments yielded robust results, propelled by the profitability of its CF Nitrogen investment, which stood as a testament to the company's strategic investment decisions.

Navigating Through Complex Market Milieus

Jay Debertin, the President and CEO of CHS Inc., added his voice to the company's achievements. "The first six months of our fiscal year have delivered overall good financial results," he remarked. The organization's proactive approach in amplifying supply chain investments and leveraging a diversified portfolio have proven to be the bedrock of its success. Debertin praised the staff and technological advancements that have shaped CHS Inc.'s ability to provide essential services and inputs that aid farmers and local cooperatives in their noble pursuit of feeding an ever-growing population.

Earnings Breakdown: Agribusiness and Energy Sectors

Pretax earnings within the Energy sector slumped to $51.6 million in Q2 FY 2024, marking a stark $213.2 million decrease from the prior year span. This can be largely attributed to declining refining margins due to depressed market pricing, including that of heavy Canadian crude oil. A small silver lining was provided by lower costs for renewable fuel credits. Additionally, the global market downturn led to reduced propane margins, compounded by lessened demands for propane and other refined fuels stemming from unseasonably warm weather patterns across the cooperative's primary trade territories.

In a contrasting vein, the Ag sector showcased pretax earnings of $56.9 million, a significant $138.4 million boost when juxtaposed with the earlier year's results. This rise in profitability emerged from bolstered margins for wholesale and retail agronomy products, buoyed by favorable market conditions. The grain and oilseed product category also enjoyed increased margins largely due to fortuitous timing of market adjustments. An uptick in grain and oilseed volumes, aided by augmented efficiencies and a more balanced global supply-demand landscape, further bolstered the segment's financial health.

Market Influences: Nitrogen Production and Corporate Strategies

The Nitrogen Production sector was confronted with its own challenges, with pretax earnings reaching $37.0 million—a $44.7 million tumble compared to the previous year. This decline primarily was due to a reduction in equity income from CF Nitrogen, driven by depreciated market prices for urea and UAN.

Corporate and Other segments experienced a pretax earning of $40.2 million, indicating a $7.8 million decrease vis-à-vis the prior year's figures. This slight downtrend was attributed mainly to lower equity income from Ventura Foods, which faced less favorable market conditions for edible oils.

The Corporate Perspective: Financial Stability and Strategic Investments

Revisiting the financial data, the Energy sector showed three and six-month pretax earnings of $51.6 million and $318.4 million, respectively, against $264.8 million and $661.4 million in the corresponding periods of the previous year. The Agricultural sector, however, depicted a more encouraging scenario with earnings of $56.9 million over the three months, contrary to a loss in the previous year, and a six-month figure climbing to $226.6 million from $205.7 million the year before. Nitrogen Production mirrored the pattern with $37.0 million (three months) and $73.5 million (six months) down from $81.7 million and $178.6 million, respectively. Corporate and Other sectors recorded $40.2 million through three months and $84.1 million over six months as opposed to $48.0 million and $84.7 million previously.

Overview of CHS Inc.'s Earnings by Segment

The earnings before income taxes showcased a contrast with $185.7 million recorded over three months and $702.5 million over six months, dipping from the previous year’s $313.0 million and $1,130.5 million. Income tax expenses and net income also trailed the past figures, with net income appreciating at $170.3 million over three months and $693.7 million through six months, compared to the preceding year's $292.0 million and $1,075.0 million.

CHS Inc.: A Pillar in Global Agriculture

CHS Inc. ( prides itself on cultivating connections that empower agriculture. As the colossal cooperative in the U.S. and a major agribusiness player globally, CHS Inc. serves a diverse and broad customer base across an impressive 65 countries. The cooperative employs approximately 10,000 dedicated staff globally. CHS Inc. fulfills a critical role, providing vital crop inputs, facilitating market access and offering risk management services essential for farmer’s productivity and food security globally. With its diversified businesses spanning agronomy, grains, foods, and energy, CHS Inc. amassed $45.6 billion in revenues during the fiscal year 2023.

Commitment to Sustainable Growth

The cooperative strides towards sustainability with a committed approach to being a careful steward of the environment, enhancing economic viability, and promoting community and employee well-being. This commitment is not only embedded in company values but is also a fundamental aspect of their strategic plans and initiatives.

Forward-Looking Statements and Market Predictions

The publicly available documents from CHS Inc., including this financial report, contain "forward-looking statements" as defined under the U.S. Private Securities Litigation Reform Act of 1995. These are recognized by terminology like "anticipate," "intend," "estimate," "expect," and serve as predictions rather than historical data. Nonetheless, the nature of such forward-looking statements means they are subject to a variety of risks, uncertainties, and changes, many of which remain outside CHS's direct influence.

The actual results and financial condition for CHS Inc. could thus diverge widely from those indicated in the forward-looking statements. Such uncertainties are aggravated by various global conditions, including the impacts of fluctuating commodity prices, government regulations, geopolitical tensions, inflation, the ongoing pandemic, and trends toward green energy solutions.

These potential risks and impacts, amongst numerous other aspects, are comprehensively discussed in the cooperative's SEC filings, including their Annual Report for the fiscal year concluding on August 31, 2023. It bears emphasizing that all forward-looking statements depend solely on current data and CHS has no obligation to revise these prognostications in light of future events, barring legal requirements.

Final Notes and Acknowledgments

CHS Inc. credits the resilience demonstrated in their mid-year earnings to the strategic balance and diversity of their portfolio and the proficiency of their global operations. As they continue to navigate a complex global market, the importance of their role in the agricultural supply chain is underscored, paired with their ongoing commitment to support the backbone of the global food economy—the farmers and their cooperatives. The cooperative takes pride in its steadfast focus on sustaining farming communities and promoting food security, while keeping an eye on financial stability and shareholder value.

In closing, CHS Inc. expresses gratitude toward all partners, staff, and stakeholders who contributed to the company's performance and reaffirms its mission to create connections that empower agriculture on a global scale.

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This news article covers the essential financial results and corporate strategies of CHS Inc. as disclosed in their recent press release. The press release offers a detailed account of the financial performance of various segments within the company and should be referenced for more detailed financial data and disclosures.