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CHS Income down sharply for '16.

CHS Inc. had $424.2 million in net income for its fiscal 2016 (which ended Aug. 31), down 46 percent from $781 million for 2015, the co-op reported in November during its annual meeting. The income decline reflects lower pretax earnings within the co-op's Energy and Ag segments, as well as in its Corporate and "Other" units.

Lower earnings in the latter two business segments were partly offset by increased pretax earnings in the co-op's Foods segment, as well as by seven months of earnings from its Nitrogen Production segment, created by an investment CHS made in CF Industries Nitrogen LLC in February 2016.

"These results reflect the continued economic down cycle in the company's core energy and agriculture businesses, as well as the impact of one-time events. Like others in our core businesses of agriculture and energy, the ongoing global downturn continued to affect both our earnings and revenues in fiscal 2016," says Carl Casale, CHS president and CEO.

Co-op revenue for 2016 was $30.3 billion, down 12 percent from $34.6 billion for fiscal 2015, primarily due to lower prices for the commodity energy, grain and fertilizer products that comprise much of the company's business.

"As fiscal 2017 unfolds, CHS will sustain its focus on its financial and operational priorities. This includes always putting safety first and taking mindful steps to maintain balance sheet strength and profitability," Casale adds.

Pre-tax earnings for the CHS Energy segment declined 49 percent, to $275.4 million, due to significantly lower margins for the company's two refineries. Earnings for the company's transportation business also declined. Record performance by CHS' propane business was significantly ahead of fiscal 2015, which included reduced crop drying and winter heating demand. The CHS lubricants business also reported record earnings for a second consecutive year.

The co-op's Ag segment--which includes crop inputs, grain marketing, local retail and processing businesses--saw pre-tax earnings of $30.9 million, down 79 percent from 2015, which included a $116.5-million, one-time impairment charge resulting from its decision to cease planned development of a nitrogen fertilizer plant at Spiritwood, N.D.

The Ag segment's Country Operations (local retail businesses) declined, primarily due to lower grain margins. This was partially offset by higher grain volumes in fiscal 2016 compared with 2015. Lower margins also contributed to a decline in earnings for the CHS wholesale crop nutrients business.

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Title Annotation:Newsline: Co-op developments, coast to coast
Publication:Rural Cooperatives
Date:Jan 1, 2017
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