Sotheby’s auction house on Friday reported operating revenues of $85.1 million for the third quarter ended Sept. 30—a $27.7 million, or 48 percent, increase from the prior period, primarily due to higher auction commission revenues and private sales commissions.
For the quarter, loss from continuing operations was $20.9 million compared to $30.4 million for the prior period—a 31 percent, improvement.
Despite the favorable results for the quarter, the company said it incurred $14.6 million in losses on certain auction guarantees in this week’s Impressionist and Modern Art sale.
Because of the seasonal nature of the art auction market, auction sales in the third quarter have historically represented only approximately 7-to-10 percent of annual auction sales, and the third quarter has historically been a loss period for the company. As a result, third quarter results are typically not indicative of expected full year results, the company said.
For the first nine months of 2007, operating revenues were a record $572 million, a $170.3 million, or 42 percent, improvement from the prior period. This increase is largely due to a 40 percent increase in auction commission revenues to $457.5 million from the prior period and a 111 percent increase in private sales commissions over the period to $42.7 million—primarily due to a 52 percent increase in consolidated sales to $3.8 billion. Income from continuing operations for the first nine months of 2007 was a record $110.7 million, a $72.7 million, or 191 percent, increase from the prior period.
The company’s results for the first nine months of 2007 were significantly impacted by a onetime benefit of $20 million related to an insurance recovery from the key man life insurance policy covering Robert Noortman, who died unexpectedly in January 2007 and a $4.8 million gain on the sale of its Billingshurst salesroom property in the United Kingdom, partially offset by a $15 million impairment charge related to intangible assets and goodwill of Noortman Master Paintings, B.V. Excluding these items, income from continuing operations for the first nine months of 2007 would have been $102.4 million, a $64.4 million, or 169 percent, improvement from the prior period.
“The art market has shown considerable strength since the beginning of our fall season and we remain positive for the remainder of the year,” said Bill Ruprecht, president and chief executive officer of Sotheby’s. “Our aggregate auction sales from September 1st through yesterday are up 32 percent from the equivalent period in 2006 and total $1.1 billion.”
So far, the fourth quarter has included some record-breaking auction totals, including:
* Magnificent Jewels and Jadeite sale which brought a record $40.8 million, highlighted by a 6.04 carat superb and extremely rare fancy vivid blue diamond ring, which brought $8 million and the per-carat record for a gemstone at auction.
* In October, Asia Week in Hong Kong achieved its highest total ever for a series of sales. The nine sales brought $200.1 million, 46 percent higher than last year’s total of $137.2 million. Well above pre-sale estimates.
Chinese Works of Art were in high demand, bringing $83.1 million with its three sales highlighted by the Imperially Inscribed ‘Tai Shang Huang Di’ White Jade Seal, which sold for $5.9 million, a record for white jade at auction. Asian Contemporary Art brought a record $42.5 million, soundly above its high estimate of $28 million.
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