Smurfit Westrock plcSW
Smurfit Westrock plc Fair Value Disclosure
14. Fair Value Measurement
The fair values of the Company's financial assets and financial liabilities listed below reflect the amounts that would be received to sell
the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price).
The Company's non-derivative financial instruments primarily include cash and cash equivalents, trade and other receivables, certain
other current assets, trade and other payables, certain other current liabilities, short-term debt and non-current debt, all of whose
carrying values approximates fair value (with the exception of debt with fixed interest rates). Fair value disclosures are classified
based on the fair value hierarchy. See “Note 1. Description of Business and Summary of Significant Accounting Policies,” for
information about the Company's fair value hierarchy.
The carrying values, net of deferred debt issuance costs, and estimated fair values of debt with fixed interest rates (classified as Level
2 in the fair value hierarchy) were as follows:
December 31, | |||||||
2025 | 2024 | ||||||
Book Value | Fair Value | Book Value | Fair Value | ||||
Debt with fixed interest rates | $11,492 | $11,616 | $11,370 | $11,289 | |||
The fair value of the Company's debt with fixed interest rates is based on quoted market prices. With the exception of debt with fixed
interest rates, the carrying amounts of all other debt instruments approximate their fair values. The variable nature and repricing dates
of the receivables securitization facilities and the revolving credit facility result in carrying values approximating their fair values.
Both the revolving credit facility and the receivables securitization facilities are classified as Level 2 in the fair value hierarchy.
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
The Company measures and records certain assets and liabilities, including derivative instruments at fair value. The following table
summarizes the fair value of these instruments, which are measured at fair value on a recurring basis, by level, within the fair value
hierarchy:
Level 1 | Level 2 | ||||||
December 31, | December 31, | ||||||
2025 | 2024 | 2025 | 2024 | ||||
Assets | |||||||
Other Investments: | |||||||
Listed | $2 | $2 | $— | $— | |||
Unlisted | — | — | 11 | 10 | |||
Derivatives in cash flow hedging relationships | — | — | 1 | 3 | |||
Derivatives not designated as hedging instruments | — | — | 10 | 11 | |||
Assets measured at fair value | $2 | $2 | $22 | $24 | |||
Liabilities | |||||||
Derivatives in cash flow hedging relationships | $— | $— | $1 | $1 | |||
Derivatives not designated as hedging instruments | — | — | 1 | 13 | |||
Liabilities measured at fair value | $— | $— | $2 | $14 | |||
There were no assets or liabilities, which are measured at fair value on a recurring basis, classified as Level 3 in the fair value
hierarchy for the periods presented.
The fair value of listed financial assets is determined by reference to their bid price at the reporting date. Unlisted financial assets are
valued using recognized valuation techniques for the underlying security including discounted cash flows and similar unlisted equity
valuation models.
The fair value of foreign currency forwards, cross currency swaps and energy hedging contracts is based on their listed market price, if
available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual
forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on
government bonds).
The fair value of natural gas commodity derivatives is estimated based on observable inputs such as commodity future prices.
For derivative financial instruments that are not designated as accounting hedges, the entire change in fair value of the financial
instrument is reported immediately in current period earnings.
Assets and Liabilities Measured and Recorded at Fair Value on a Non-recurring Basis
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities
at fair value on a non-recurring basis. This includes assets acquired and liabilities assumed as a result of business combinations or non-
monetary exchanges, situations where events or changes in circumstances indicate the carrying value may not be recoverable, or when
they are deemed to be other than temporarily impaired. These assets include property, plant, and equipment, goodwill and other
intangible assets, assets and disposal groups held for sale and other non-current assets. The fair values of these assets are determined,
when applicable, based on valuation techniques using the best information available, and may include quoted market prices,
observable price for similar assets, market comparables, and discounted cash flow projections. These non-recurring fair value
measurements are considered to be Level 3 in the fair value hierarchy.
For more details on the measurement of assets acquired and liabilities assumed as part of business combinations refer to “Note 2.
Acquisitions”. For more details on the remeasurement of assets in connection to impairments recorded in the year refer to “Note 5.
Impairment and Restructuring Costs”.
Accounts Receivable Monetization Agreements
Available to the Company is a $700 million accounts receivable monetization facility to sell to a third-party financial institution all of
the short-term trade receivables generated from certain customer trade accounts. On September 12, 2025, we amended this agreement
to extend the maturity date by one year to September 15, 2026. This facility (the “Monetization Agreement”) has Coöperatieve
Rabobank U.A., New York Branch, as purchaser, (“Rabobank”). The terms of the Monetization Agreement limit the balance of
receivables sold to the amount available to fund such receivables sold, thereby eliminating the receivable for proceeds from the
financial institution at any transfer date. Transfers under the Monetization Agreement meet the requirements to be accounted for as
sales in accordance with guidance in ASC 860, “Transfers and Servicing” (“ASC 860”). We pay a monthly yield on investment to
Rabobank at a rate equal to adjusted Term SOFR plus a margin on the outstanding amount of Rabobank’s investment. The Company
also has a similar $100 million bilateral facility with Sumitomo Mitsui Banking Corporation, New York Branch as purchaser. On
December 4, 2025, we amended this agreement to extend the maturity date by one year to December 2026 and to reduce the facility
size from $110 million to $100 million.
The customers from these facilities are not included in the receivables securitization facilities, as discussed in more detail in “Note 15.
Debt” and “Note 22. Variable Interest Entities”.
The following table presents a summary of these accounts receivable monetization agreements for the years ended December 31, 2025
and December 31, 2024:
Years ended December 31, | |||
2025 | 2024 | ||
Receivable from financial institutions at January 1 | $— | $— | |
Receivables sold to the financial institutions and derecognized | (2,572) | (1,381) | |
Receivables collected by financial institutions | 2,638 | 1,319 | |
Cash (payments) proceeds (to) from financial institutions | (66) | 62 | |
Receivable from financial institutions at December 31 | $— | $— | |
The activity for the comparative year is for the period following the Combination. Receivables sold under these accounts receivable
monetization agreements as of the balance sheet date were $659 million (December 31, 2024: $725 million).
Cash proceeds or payments related to the receivables sold are included in “Net cash provided by operating activities” in the
Consolidated Statements of Cash Flows in the “Accounts receivable” line item. The expense related to the sale of receivables was
$38 million (December 31, 2024, for the post-Combination period: $23 million). The expense recorded may vary depending on current
rates and levels of receivables sold and is recorded in “Other expense, net” in the Consolidated Statements of Operations. Although the
sales are made without recourse, we maintain continuing involvement with the receivables sold as we provide collections services
related to the transferred assets. The associated servicing liability is not material given the high credit quality of the customers
underlying the receivables and the anticipated short collection period.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.