For the business quarter that ended on June 30, the company reported a 13 per cent fall in auction sales to approximately $1 billion but auction and related revenues of $175.6m represented a year-on-year increase of $9.4m or 6 per cent.
This increase in profitability reflects the impact of Sotheby’s cost-cutting measures and improved commission margins.
The overall take from vendors has been higher due primarily to a relatively low number of major collections sold in 2005 (single vendor consignments traditionally have lower auction commission margins), and a significant increase in the buyer’s premium rates implemented in early 2005. Sotheby’s now charge buyers a top rate of 20 per cent.
In his statement to shareholders, president and CEO of Sotheby’s Holdings, Inc., Bill Ruprecht, also cited “a high level of private sale activity” as instrumental in the “highest second quarter revenues ever and [the] best income from continuing operations since 1990.”
By region, auction and related revenues in North America were flat for the first half of 2005 compared to the prior period, primarily due to the absence of a comparable event to the Whitney Greentree sale in 2004 that included Picasso’s Garçon à la Pipe sold for a premium-inclusive $104.2m. The progress was seen in Europe, where revenues were up 12 per cent aided by Easton Neston, and record London sales of Russian and Contemporary art. In Asia a record Hong Kong spring series saw revenues rise an extraordinary 54 per cent.
The company's income from continuing operations for the second quarter of 2005 was $42.5m compared to $41.1m in the previous year.
Income from continuing operations for the first half of 2005 was $32.7m. Like-for-like this represented an improvement of $6.4m, or 24 per cent on the equivalent period in 2004, although on the balance sheet it reads as a $21.8 million decrease due to the one-off windfall of $45m received in the first quarter of 2004 when Sotheby’s Realty was licensed to Cendant.
This year’s figures are the first for some time not to feature the extraordinary net costs relating to anti-trust matters that have crippled the financial performance of the company since 2000.
Improved commission margins help Sotheby’s prosper as sales fall
Despite a substantial fall in total sales, increases in buyer’s premium and vendor’s commission margins helped Sotheby’s post record revenues for the second quarter of 2005.
