CHS posts fiscal 2016 earnings of $424.2 million

ST. PAUL, MINN. (Nov. 3, 2016) – CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, today announced earnings for fiscal 2016 of $424.2 million.

CHS net income for fiscal 2016 (Sept. 1, 2015 – Aug. 31, 2016) of $424.2 million was down 46 percent from $781.0 million for fiscal 2015, reflecting lower pre-tax earnings within the company’s Energy and Ag segments, as well as its Corporate and Other category. Lower pre-tax earnings within these two segments were partly offset by increased pretax earnings in its Foods segment, and seven months of earnings from its Nitrogen Production segment which was created by the February 2016 strategic investment CHS made in CF Industries Nitrogen, LLC (CF Nitrogen). 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.

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CHS Equity Redemption

CHS Board addresses 2016 equity management; delays individual equity redemption program changes

 The CHS Board has delayed implementation of the company’s new individual equity redemption program, a decision made following its regular review of the CHS equity management program.

“This decision was made as we considered a number of factors, including our commitment to balance sheet management and the current economic cycle,” says CHS Board Chairman Dave Bielenberg. “CHS remains financially sound and profitable, but as we navigate this economic cycle, the board believes this delay was appropriate as we continue to take a long-term view in managing equity redemptions.”

When effective, the new program would add “age of equity” distribution like that now used for member cooperatives to the existing “age of producer” program. It had been set to take effect with redemptions made based on individuals’ fiscal 2016 (Sept. 1, 2015 – Aug. 31, 2016) business with CHS. It is now slated to take effect for fiscal 2017 (Sept. 1, 2016 – Aug. 31, 2017) business and will affect distributions taking place in fiscal 2018, although the board will continue to evaluate this timing as part of its overall equity management review.

In the meantime, CHS will continue to redeem 100 percent of individual equity upon request to producers age 70 or older and to estates. As previously announced, producers who have already received a full equity redemption at age 70 will receive any future patronage distributions as 40 percent cash and 60 percent equity.

While specific amounts of patronage distributions and equity redemptions will be reported after CHS reports fiscal 2016 results in November, Bielenberg adds that the company intends to return 40 percent of patronage earnings in cash. He also notes that CHS will not issue non-qualified equity for fiscal 2016 and will pass through unused portions of the company’s Section 199 domestic production deduction (DPAD) to eligible owners.

To date, CHS has redeemed previously earned member cooperative equity through a portion of 2006, well ahead of the CHS Board’s goal of maintaining age of equity at about 15 years and a significant improvement from age of equity at 40 years earlier this decade.

In addition, the CHS Board has also determined that the company will return 40 percent of fiscal 2016 patronage earnings to eligible member cooperatives in cash. The company will not issue non-qualified equity for fiscal 2016 and will pass through unused portions of its fiscal 2016 Section 199 domestic production deduction (DPAD) to eligible owners.

 

CHS Pro Advantage contract now signing up bushels for 2017, 2018

Corn field - commoditiesWhen commodity markets turn volatile, pulling the trigger gets tougher. Grain producers looking for a seamless way to diversify – and simplify – their marketing have one more choice with CHS Pro Advantage.

This contract allows a grower to pledge a specific quantity of bushels to be professionally priced over a specific period of time, essentially taking the emotion out of selling. Bushels are priced by the trading professionals at CHS Hedging-owned Russell Consulting Group.

“The 2016 crop year was our inaugural offering for CHS Pro Advantage and we saw a tremendous interest from farmers who wanted to take advantage of pricing by experts who have a track record of success,” says John Whittle, merchandiser, CHS Grain Marketing NA.

“It’s important to remember the basis decision remains with the grower,” says Kent Beadle, marketing manager, Russell Consulting Group. “The settlement price to the grower is based on the performance of the futures and options hedges traded by our licensed brokers.”

Contract participants receive regular email updates about marketing progress and there is a price-out option available at any time during the pricing period.

Enrollment for CHS Pro Advantage corn, soybean and spring wheat bushels is now through Dec. 14, 2016. With one and two-year sign-ups, growers can enroll 2017 as well as 2018 bushels. Contact your local grain merchandiser for more details. Remember, there is a risk of loss when trading commodity futures and options.

© 2018 CHS Inc.