Shares of Volkswagen (ETR:VOWG_p) subsidiary, Traton, took a hit on Wednesday, falling to €17.23, despite an impressive surge in nine-month earnings and a raised full-year adjusted operating profit margin outlook.
The company reported a significant jump in earnings, soaring to €2.695 billion from €609 million the previous year. Following this strong performance, Traton upgraded its full-year adjusted operating profit margin forecast from the initial 7-8% range to 7.5-8.5%.
However, it appears that market expectations had already factored in this positive news. The company-compiled consensus had previously predicted an 8.4% full-year margin, suggesting that the revised guidance was not as bullish as investors had hoped for.
Adding to the dampened sentiment was the performance of Traton's key brand, Scania. The brand's nine-month margin came in at 11.5%, falling short of Citi analysts' expectations of 13%. This underperformance has likely contributed to the decline in Traton's share price.
Despite the earnings surge and raised profitability guidance, the market response indicates that investors were expecting even stronger outcomes from Traton and its key brand Scania. The company will need to address these high expectations moving forward to regain investor confidence and bolster its share price.
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