CHS Inc. (NASDAQ:CHSCP) abruptly closed its plant in Hutchinson, Kansas; a plant in Creston, Iowa; and innovation and technology center in Eagan, Minnesota. The closures announced by CHS, the country’s largest farmer-owned co-operative, resulted in 144 layoffs.
The closures come after CHS announced it is moving out of soybean protein production. The company has also seen its profits plunge. In fiscal 2017, net income tumbled 70% year-over-year to $127.9 million.
CHS to See Maximum Job Cuts at Hutchinson Facility in Kansas
CHS announced it has permanently closed three facilities, including a soybean processing plant in Hutchinson, Kansas, and Creston, Iowa, as the company moves out of soy protein production.
The global agribusiness cooperative also said it closed a technology and innovation center in Eagan, Minnesota.
The closure of the three locations resulted in 144 job cuts. While the locations are already closed, employees will be paid through to January 30, 2018.
The company said the closures were done in order to restore “financial flexibility” and position the company for “long-term success.”
A statement from CHS noted, “In recent months, Jay Debertin, CHS CEO, shared strategic priorities for CHS with employees and our member-owners. Primary among these is restoring financial flexibility for CHS, which includes reviewing all company assets to determine which are a strategic fit for CHS now and into the future. As part of its broader FY18 CHS priorities of restoring financial flexibility and positioning the company, its owners and other stakeholders for long-term success, CHS has ceased production at, and permanently closed, soybean processing facilities at Hutchison, Kansas and Creston, Iowa, and closed its Innovation and Technology Center at Eagan, Minnesota.”
The closure of the Hutchinson facility resulted in the biggest job losses, at 77. At the Creston facility, 53 employees were laid off.
CHS Inc. is a leading global agribusiness owned by farmers, ranchers, and cooperatives across the U.S. The Fortune 100 company supplies energy, crop nutrients, grain marketing services, animal feed, food and food ingredients, along with insurance, financial, and risk management services.
CHS Reports around $300-M Loss Year-Over-Year in 2017
CHS’s desire for financial flexibility comes on the heels of disappointing results for fiscal 2017 in which the company’s net income suffered a huge decline.
On November 9, CHS announced its financial results for fiscal 2017 ended August 31, 2017. Full-year revenue came in at $31.9 billion, a five percent increase over the $30.3 billion recorded in fiscal 2016.
Net income in 2017 was $127.9 million, a 70% decrease over the $424.2 million recorded in fiscal 2016.
For fiscal 2017, CHS reported a loss before income taxes of $54.8 million, down from income before income taxes of $419.9 million in fiscal 2016. Part of the loss was a result of charges related to a Brazilian trading partner filing for bankruptcy, intangible and fixed asset impairments, and bad debt and loan loss reserve charges.
Jay Debertin conceded that 2017 has “been a challenging year.” And that as fiscal 2018 unfolds, the company will look to “restore financial flexibility.” He has followed through on that priority, by announcing the closure of three facilities and 144 job cuts.
“Hutchinson’s CHS Inc. plant closes, laying off 77,” Hutchinson News, December 1, 2017.
“CHS Inc. closing Creston facility,” Creston News Advertiser, December 1, 2017.
“CHS reports fiscal year-end results and announces FY 2018 priorities,” CHS Inc., November 9, 2017.