CEOs Worry About Weather Ahead of Summer That Promises Even More Extreme Conditions

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CEOs Worry About Weather Ahead of Summer That Promises Even More Extreme Conditions

(Bloomberg) -- America’s top executives are now spending an increasing amount of time talking about something completely out of their control — the weather. 

With three weeks still remaining in the second quarter, weather has already been discussed on earnings calls for S&P 500 Index companies more than any time since 2019, according to data compiled by Bloomberg. And it’s not just executives’ remarks — analyst questions involving weather have more than doubled versus the first quarter, the data show. 

That renewed meteorological focus comes as investors anticipate an economically destructive El Niño weather pattern this summer, and follows months of intense storms and snow that caused extensive disruptions in the US. 

Read more: A Global Stock Trader’s Guide to More Extreme Weather Events

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

Further driving the increase in weather discussion on earnings calls is its asymmetrical impact. While Deere (NYSE: DE ) & Co. counts on wet and varied conditions to drive demand and Pinnacle West Capital Corp (NYSE: PNW ) recently benefited from a lengthy Phoenix, Arizona winter, Michigan-based electricity provider CMS Energy (NYSE: CMS ) and Alaska Air (NYSE: ALK ) Group were hurt by similar conditions. 

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

The last time weather weighed on executives and analysts this much also coincided with an El Niño pattern in 2019. This year’s version may herald one of North America’s hottest summers on record, intensified storms across the globe, and trillions of dollars in lost economic activity. 

But despite that potential for outsize influence, many executives loathe discussing the weather. When asked about weather-related demand on Sherwin Williams’ first quarter earnings call, chief executive officer John Morikis bluntly responded: “I’d characterize it as we don’t like to talk about weather, you’re right.”

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

©2023 Bloomberg L.P.

 

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