Income Statement

The structure of an IFRS income statement

A typical Nordic income statement has these lines, from top to bottom:

1. Revenue (net sales).
2. Operating expenses, presented either by nature (materials, employee costs, other expenses, depreciation) or by function (cost of sales, selling, administration, R&D). Companies that present by function also show gross profit.
3. Other operating income and expenses, such as gains on asset sales.
4. Operating profit (EBIT).
5. Financial income and expenses, and the share of results of associates if it is presented below operating profit.
6. Profit before tax.
7. Income taxes.
8. Profit from discontinued operations, if any.
9. Profit for the period, split between owners of the parent and non-controlling interests.
10. Earnings per share, basic and diluted.

The table on this page shows which format each company we track uses; the worked example above walks through one company’s latest quarter.

What changes with IFRS 18 in 2027

IFRS 18 replaces IAS 1 for financial years beginning on or after 1 January 2027 and is the biggest change to the income statement in decades:

• Three categories. Income and expenses are classified as operating, investing or financing (plus income taxes and discontinued operations).
• Two required subtotals. Every company must show operating profit and profit before financing and income taxes, with common definitions. Today IFRS defines neither, and companies draw the lines differently.
• Management-defined performance measures. Adjusted figures the company uses in its communication, such as adjusted operating profit, must be explained and reconciled in an audited note.
• Better grouping. Companies must avoid large “other” lines, and those presenting costs by function must disclose certain costs by nature in a note.

Comparative figures are restated, so reports for 2027 will also show 2026 on the new basis. Expect some companies’ operating profit to change slightly when they first apply the standard.

How to read an income statement

• Read it top-down as a set of margins. Gross margin shows pricing power and production costs, operating margin the profitability of the whole business, and net margin what reaches shareholders. See the operating margin calculator.
• Compare periods, not single numbers. Most reports show the same quarter of the previous year and the year to date next to the latest quarter.
• Separate one-off items. Restructuring costs, impairments and gains on disposals pass through the income statement. The reconciliation to adjusted figures shows where they are.
• Read it with the other statements. The income statement is based on accruals: revenue when it is earned and costs when they are incurred, not when cash moves. The cash flow statement shows whether profit turns into cash, and the balance sheet shows the capital used to earn it.
• Use the notes. Segment information, tax reconciliations, and the split of depreciation and impairment are all in the notes.

Quarterly reports and IAS 34

Interim reports follow IAS 34, which allows a condensed income statement with the main headings and subtotals of the annual statements. They show the latest quarter, the year to date and the same periods of the previous year.

The EU Transparency Directive requires listed companies to publish an annual financial report and a half-year report; since 2013 it no longer requires quarterly reports. Most Nordic listed companies still publish reports or business reviews for the first and third quarters, some with a full income statement and some with only key figures. The quarterly figures on Finpendium come from these reports.