CEOs worry about weather ahead of summer that promises even more extreme conditions

(Bloomberg Opinion) — America’s top executives are spending more and more time talking about something completely out of their control: the weather.

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With three weeks left in the second quarter, the weather has already been discussed on earnings calls for S&P 500 Index companies more than at any time since 2019, according to data compiled by Bloomberg. And it’s not just executive feedback: Weather-related analyst questions have more than doubled compared to the first quarter, the data shows.

That renewed weather focus comes as investors anticipate an economically destructive El Nino weather pattern this summer, following months of intense storms and snow that caused major disruptions across the US.

Read more: A guide for global stock traders on more extreme weather events

The increased weight on weather is widespread across all sectors, the data shows, but is most pronounced among companies in the disparate sectors of utilities and consumer discretionary, illustrating the large economic impact of extreme weather.

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What is further driving the rise of the weather discussion on earnings calls is its asymmetrical impact. While Deere & Co. counts on wet and mixed conditions to drive demand and Pinnacle West Capital Corp recently benefited from a long winter in Phoenix, Arizona, Michigan-based electricity provider CMS Energy and Alaska Air Group were affected. for similar conditions.

In the case of Alaska Air, the airline posted just its second loss in eight quarters due to an extreme winter. Chief Executive Benito Minicucci is now bent on bolstering the company’s ability to mitigate bad weather as much as possible.

The last time the weather hit both executives and analysts alike coincided with an El Niño pattern in 2019. This year’s version may herald one of the hottest summers on record in North America, intensifying storms around the world, and billions dollars in lost economic activity.

But despite that potential for great influence, many executives are loathe to talk about the weather. When asked about the weather-related lawsuit on Sherwin Williams’ first-quarter earnings call, CEO John Morikis bluntly replied: “I would characterize it as we don’t like to talk about the weather, you’re right.”

Some transcripts used in the analysis of this story were computer generated and may include mentions of weather unrelated to earnings quality.