Sotheby’s releases first nine months 2014 financial results

0
462

Sotheby’s has reported financial results for the third quarter and nine months ended 30 September 2014.

Sotheby’s achieved a 120% increase in adjusted pre-tax income and a 49% increase in pre-tax income for the nine months ended 30 September 2014.

This improvement is principally due to the performance of the Agency segment, which reported an increase in gross profit of $48.9 million (12%) for the period. The improved performance of the Agency segment is principally the result of a 26% increase in net auction sales and a significant reduction in auction direct costs as a percentage of net auction sales, partially offset by a $23.3 million (35%) decrease in private sale commission revenues and a decline in auction commission margin from 16.2% to 15.5%.

On an after-tax basis, Sotheby’s year-to-date results improved $4.5 million (12%), as the improvement in pre-tax income was partially offset by an increase in Sotheby’s effective income tax rate.

“Sotheby’s has achieved substantial and broad-based successes across our global salesrooms through the third quarter, with double-digit growth in auction sales in virtually all our categories – including Impressionist & Modern, Contemporary, Asian Art, Jewelry, Old Masters, Photographs and Prints, 20th Century Design and Wine,” said chairman, president and chief executive officer Bill Ruprecht.

“Our Impressionist & Modern sale last week achieved the highest result for any auction in Company history – clearly establishing our leadership in this category for the fourth consecutive year.

“This week we look forward to the first in a series of important sales from the Estate of Mrs. Paul Mellon as well as our Contemporary sales. The art market remains robust and we are confident as we look towards the end of this year,” added Mr. Ruprecht.

In the year-to-date period adjusted expenses increased 1%, which reflects an improvement upon guidance provided earlier this year for certain categories of expense. In the first nine months of 2014, total expenses increased 12%, primarily due to the cost of property sold in profitable Principal transactions completed in the period, which increased $12.9 million, restructuring charges ($14.3 million) and special charges ($20.1 million).

The third quarter is always a slow quarter at Sotheby’s due to the seasonality of the global art auction business. In the third quarter of 2014, Sotheby’s reported an Adjusted Pre-tax Loss of ($34.1) million, a $7.8 million (19%) improvement when compared to the same period in the prior year, principally due to a lower level of expenses, largely attributable to management’s continued cost reduction initiatives.

The comparison to the prior year is also favorably impacted by a $15.7 million (32%) increase in auction commission revenues, which is largely offset by a $13.6 million (52%) decline in private sale commissions.

Third quarter results include restructuring charges of $14.3 million and an insurance recovery of previously reported special charges of $4.2 million. Including these items, Sotheby’s reported a pre-tax loss of ($44.2) million in the third quarter of 2014, as compared to a pre-tax loss of ($41.9) million in the same period of the prior year. On an after-tax basis, Sotheby’s third quarter results improved by $2.4 million (8%) as a result of a higher income tax benefit recorded in the quarter due to an increase in Sotheby’s annual effective income tax rate.

Sotheby’s Impressionist & Modern Sales brought a combined $470 million, with the Evening Sale establishing Sotheby’s highest total for any auction in company history. Registered bidders came from 40 countries, with the highest percentage from the United States, Europe and Asia. The results bookended a very strong year for Impressionist & Modern Art at Sotheby’s, which opened this February with an Evening Sale that totaled $266.6 million – Sotheby’s highest total for any London auction.

Sotheby’s Autumn Hong Kong sales series last month brought $327 million. Sotheby’s position as a market leader in Hong Kong was re-affirmed, with participants from a record 60 countries this season, including increased interest from clients from Greater China. Sotheby’s auctions and activities in Beijing as well as continued engagement with clients through gallery exhibitions, mid-season auctions and retail offerings in Hong Kong are also contributing significantly to Sotheby’s success in Asia.