Pro forma, adjusted or sustainable?

Pro forma financials simply fail to deliver what they promise because they do not provide a better picture of a company's economic situation. Too often, companies only adjust their earnings for costs, but leave the corresponding revenues in the profit, so that a distorted picture emerges. In fiscal 2014, 11 of the DAX30 companies reported adjusted earnings per share averaging 13% above the official figure. Valuation ratios such as the P/E ratio are 23% lower due to the pro forma earnings.

If one opens the first page of the Adidas Group's current annual report, one inevitably ends up on the overview page on which the results for the financial year are presented. If one pays attention only to the largely printed earnings per share, one quickly overlooks the fact that the headline is marked with a footnote. The small print at the bottom of the page provides further information: the key figures do not include costs amounting to EUR 78 million, or 17% of net income for the year. The proudly presented earnings per share therefore do not correspond to the actual profit, but have been changed. This is only a so-called "pro forma" figure.

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