November 7, 2012 / 8:56 PM / in 5 years

CHS: big footprint, high commodity prices boost profits

CHICAGO (Reuters) - CHS Inc (CHSCP.O), the largest U.S. farm cooperative, on Wednesday said quarterly earnings jumped 75 percent from a year ago, boosted by strong commodity prices and a global network of facilities.

The Minnesota-based company reported net income of $360.9 million for its fiscal fourth quarter ending August 31, up from $206.5 million a year earlier.

Net income for the fiscal year ending August 31 reached $1.26 billion, up 31 percent from the previous year. It was the first time a U.S. agricultural cooperative surpassed $1 billion in annual earnings, according to CHS.

The cooperative joined bigger rivals Cargill Inc CARG.UL and Bunge Ltd (BG.N), two of the world’s largest agricultural trading houses, in attributing solid results to networks of employees and facilities.

Bunge last month said it doubled quarterly profits by mobilizing its global grain network to supply customers hit by the worst U.S. drought in more than 50 years. Cargill’s quarterly earnings more than quadrupled from a year earlier.

“The strength of our diverse CHS business portfolio, along with a strong domestic and global footprint, combined in fiscal 2012 to allow us to successfully navigate continued market volatility,” said Carl Casale, CHS’ president and chief executive officer.

CHS is owned by about 350,000 farmers and ranchers, either directly or indirectly via about 1,100 smaller co-ops. Owners of CHS stock, traded on Nasdaq, are non-voting shareholders.

Shares of CHS were down 0.7 percent to $30.95 in late afternoon trading on a day of broad losses for stocks of nearly 2 percent.

    The company supplies energy, crop nutrients, grain, livestock feed, food and food ingredients, as well as business services including insurance, financial and risk-management services.

    It said energy earnings benefited from strong petroleum refining margins, with the segment reporting a quarterly income of $293.4 million, up 25 percent from a year ago.

    The agriculture segment reported quarterly income of $37.9 million, up from a loss of $16.6 million a year ago, owing to “strong local crop nutrients movement and solid grain volume.”

    Fiscal-year income for the agriculture segment was $327.4 million, down almost 25 percent from 2011, when the company included a pre-tax gain of $119.7 million on the sale of an investment in a Brazil-based joint venture.

    CHS is seeking to expand its grain buying, storing and shipping assets to meet rising demand from Asia and tap increasing grain output in South America and eastern Europe, Casale told Reuters last month.

    The company has expanded its export facilities in the U.S. Pacific Northwest and Gulf Coast, South America and eastern Europe over the past two years, tapping several producing regions to help blunt the impact of weather-related crop shortfalls.

    Reporting By Tom Polansek; Editing by Tim Dobbyn

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