'We don't set records every year,' CEO says ahead of CHS profits dropping 33%

Addressing a crowd of the cooperative's owners and customers in December, CHS chief executive Jay Debertin warned that after a strong 2023, "No two years are the same."

"We don't set records every year around here, but it is nice when we do," he said with a smile. "The commodities fluctuate, the margins change — that's the business that we're in."

His words foreshadowed a steep drop in profits the Inver Grove Heights-based agricultural cooperative reported this week.

CHS saw profits tumble 33% in its most recent quarter amid tighter margins in its oil refining and oilseed businesses. The $522.9 million profit for the quarter that ended Nov. 30 follows a record set in last year's first fiscal quarter.

"CHS earnings were strong for the first quarter, despite a relative decline from last year's record earnings," Debertin said in a statement.

The quarter's $11.4 billion in revenue marked an 11% decline from the year before.

CHS energy earnings, which have recently comprised the largest share of the company's profit, were hit by "decreased selling prices resulting from global market conditions," according to a regulatory filing.

CHS owns two oil refineries in Montana and Kansas, as well as the Cenex brand.

The business is cyclical and typically performs better "in the spring, summer and early fall when gasoline and diesel fuel use by agricultural producers is highest and is subject to global supply and demand forces," according the federal Securities and Exchange Commission (SEC) filing.

For the co-op's largest segment by revenue, its agricultural trading and processing business, lower commodity prices offset higher volumes of sales.

"We are unable to predict how long the current environment will last or the severity of the financial and operational impacts to us," the SEC filing said.

Debertin, who was recently appointed to the board of directors for the Federal Reserve Bank of Minneapolis, said at last month's CHS annual meeting that overall, "ag is in a good position."

"It's not been an easy point to get to," he said, "but all signs point to a strong outlook."