Company: WKC
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001628280-25-007620
Chunk: 12

Company: WORLD KINECT CORP
Filing Date: 2025-02-25
Form: 10-K
Item: Item 7A
Chunk 12
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Derivative and Financial Instruments Market Risk

We use commodity-based derivative contracts and financial instruments, when we deem it appropriate, to manage the risks associated with changes in the prices of fuel and fuel-related products, fluctuations in foreign currency exchange rates and interest rates, or to capture market opportunities. We utilize hedge accounting and formally designate certain of our derivative instruments as either cash flow or fair value hedges. Derivative instruments that are not designated are designed to achieve an economic offset of the underlying price risk exposure. As a result, any changes in income associated with our derivatives contracts are substantially offset by corresponding changes in the value of the underlying risk being mitigated. However, in markets where the derivative instruments with longer maturities are automatically replaced by equivalent positions with shorter maturities, we may experience timing differences between the realized and unrealized gain or loss of the underlying transaction and hedged item although the underlying risk being mitigated is still offset. Financial instruments and positions affecting our financial statements are described below and are held primarily for hedging purposes.

Commodity Price Risk

Our commercial business segments use derivative instruments, primarily futures, forward, swap, and options contracts, in various markets to manage price risk inherent in the purchase and sale of fuel. Certain of these derivative instruments are utilized to mitigate the risk of price volatility in forecasted transactions in a cash flow hedge relationship and to mitigate the risk of changes in the price of our inventory in a fair value hedge relationship. In addition, we use derivatives as economic hedges or to optimize the value of our fuel inventory to capitalize on anticipated market opportunities.

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The notional and fair market values of our commodity-based derivative instrument positions were as follows (in millions, except weighted average contract price):

As of December 31,Commodity Contracts (In millions of BBL)20242023Hedge StrategyDerivative InstrumentSettlement PeriodNotional Net Long/(Short)Weighted Average Contract PriceFair ValueAmountNotional Net Long/(Short)Weighted Average Contract PriceFair ValueAmountDesignated hedgeCommodity contracts hedging inventory2024— $— $— (0.4)$94.97 $3.8 20250.1 93.74 (4.5)(0.1)105.07 0.3 (4.5)4.1 Non-designated hedgeCommodity contracts2024— — — 0.8