Sotheby’s Announces 2009 Second Quarter and First Half Results-Profits Down 87%

. August 5, 2009

Sotheby’s today announced results for the second quarter and first six months ended June 30, 2009.

For the quarter ended June 30, 2009, the Company reported operating revenues of $167.3 million, a $152.8 million, or 48%, decrease from the prior period. This decrease is primarily due to a 66% decline in net auction sales attributable to the downturn in the global economy and international art market. Partially offsetting this decline is a 620 basis point, or 41%, increase in auction commission margin, from 15.1% in the second quarter of 2008 to 21.3% in the current period, as a result of the Company’s revenue enhancement strategies and a change in sales mix. Also positively impacting revenues is a $10.8 million reduction in principal activities losses over the period due to the significant level of auction guarantee losses in the prior period. Sotheby’s has substantially reduced its use of auction guarantees for sales occurring in 2009 and expects to continue to significantly limit its use of auction guarantees for the foreseeable future.

Net income for the second quarter of 2009 is $12.2 million, or $0.18 per share, compared to $95.3 million, or $1.41 per share, for the prior period. This decrease is largely due to the aforementioned revenue decline and is partially offset by a $50.3 million, or 30%, reduction in operating expenses. Excluding restructuring charges in 2009 and a non recurring benefit recorded in 2008, the reduction in operating expenses is $73.5 million*, or 39%*, from the prior second quarter. This expense improvement is attributable to management’s cost reduction initiatives as well as a lower level of net auction sales during the period.

For the first six months of 2009, operating revenues totaled $221.7 million, a $227.7 million, or 51%, decline from the prior period, and net loss was ($22.3) million, or ($0.34) per share, compared to net income of $82.9 million, or $1.23 per share, for the prior period. This decline is primarily due to a 51% decline in first half operating revenues, attributable to a 67% decline in net sales over the period, and is partially offset by a 28% reduction in operating expenses in the first half of 2009 as compared to the same period in the prior year. Excluding restructuring charges in 2009 and a non-recurring benefit recorded in 2008, the reduction in operating expenses is $116.6 million*, or 35%, from the prior year.

“With auction commission margins up 41% and costs down 39%* (excluding restructuring charges in 2009 and a nonrecurring benefit recorded in 2008), Sotheby’s second quarter results demonstrate Management’s response to the global economic turbulence of 2008,” said Bill Ruprecht, President and Chief Executive of Sotheby’s. “The 620 basis point improvement in auction commission margin to 21.3% for the second quarter brought an incremental $39.3 million or 24% of total revenues for the period, a very significant increase. We adjusted quickly to the different and difficult environment that suddenly presented itself and we are very well positioned to capitalize on a market rebound and benefit from our improved margins and lower costs.”

Mr. Ruprecht added: “The steady improvement in sell through rates by lot since November has been another positive indicator. In Impressionist and Modern Art, those rates in our evening sales went from 64% (November) to 81% (May) to 85% (June) and from 68% (November) to 81% (May) to 93% (June) for Contemporary Art. These figures and the 46% increase in second quarter private sales to $134 million show active participation at new price levels and give confidence to consignors and to buyers alike that there is now a more stable marketplace.

“We are on track to achieve the $160 million in cost savings in 2009 as compared to 2008 as announced last quarter. These substantial savings, as well as a new three year $150 million revolving credit facility that we expect to close with GE Capital later this month (subject to the conditions in the GE Capital commitment letter), have us on solid ground for the future.”

Second and Third Quarter Sale
Sotheby’s summer fine arts sales in London in late June brought $132.0 million, near the high end of the pre-sale estimate of $144 million and with a high sell through rate of 86% for the series. The Impressionist and Modern Art sales brought $75.8 million and were highlighted by the sale of Pablo Picasso’s Homme à l’épée for $11.5 million, the highest price of the London summer sales season for any auction house. London’s Contemporary Art sales totaled $56.2 million and were highlighted by the sale of Andy Warhol’s 1963 painting Mrs. McCarthy and Mrs. Brown (Tunafish Disaster) for $6.1 million, above the pre-sale low estimate of $5.8 million.

Sotheby’s July London Old Masters and British sales led the market and brought $72.4 million, well within the pre-sale estimate of $59/$85 million and including the Collection of Barbara Piasecka Johnson which brought $16.9 million. The top lot of the sales was Pieter Brueghel’s The Massacre of the Innocents which sold for $7.4 million, above the pre-sale high estimate of $5.6 million. Auction records were set for nine artists during the week.

Upcoming Sale
Sotheby’s fall Hong Kong sales will be held from October 3rd to 8th and will offer over 2,000 lots with a combined pre-sale estimate of approximately $95 million. A number of private collections with exceptional provenance will be offered, including a single-owner collection consisting of Imperial works of art and objects from the Qianlong Reign. Highlights from this collection will include An Imperial Knife with a Rhinoceros Horn Scabbard, Mark and Period of Qianlong (est. in excess of $1 million) and A Han Dynasty Jade Bi in an Imperial Zitan Mount, Mark and Period of Qianlong (est. $0.8/$1 million).

Other highlights of the series include An Outstanding Imperial Carved Zitan ‘Ten Dragon’ Throne, Qianlong Period (est. $2.6/$3.8 million), A Superb and Rare Large Blue and White ‘Dragon’ Moonflask, Seal Mark and Period of Qianlong (est. $1.9/$2.6 million) and Sanyu’s Lotus et Poissons Rouges (Lotus and Red Fish) (est. $1.9/$3.2 million). Wine from two superb American single-owner collections will include over 6,000 bottles with a combined pre-sale estimate of $4/$6 million.

During the fall 2009 and winter 2010 auction seasons Sotheby’s in New York will present works from the collections of renowned philanthropist and patron of the arts, Dr. Arthur M. Sackler. The offering of several hundred objects from Dr. Sackler’s collections comprises important Impressionist and Modern paintings, among them Wasilly Kandinsky’s Krass und Mild (Dramatic and Mild) from 1932 (est. $6/$8 million) as well as Chinese Furniture, Asian Carpets, English Furniture, Antiquities, Pre Columbian Art, Old Master Drawings and European terracottas and bronzes. Together the group is estimated to bring more than $15 million.

In November, Sotheby’s London will present the collection of the renowned actor, director and film producer Lord Richard Attenborough and his wife, Lady Attenborough. The sale is made up of a fine selection of works from some of the leading British artists of the 20th Century and is expected to bring in excess of $3.2 million. The highlight of the sale is Old Houses by LS Lowry which is estimated at $500,000-$840,000.

In December in New York, Sotheby’s Magnificent Jewels sale will include jewels from the collection of former Brazilian model and philanthropist Lúcia Moreira Salles. Her collection includes Cartier, Van Cleef & Arpels, Jar, Verdura, Bulgari and stunning natural pearls and spectacular stones and has a pre-sale estimate of $2.5/3.6 million.

Additional Upcoming Sales
For the fourth year in a row Sotheby’s will be returning to Chatsworth in Derbyshire, England for a major exhibition of Modern and Contemporary sculpture which is to be offered for private sale. Works by Antony Gormley, Henry Moore, Manolo Valdes, Subodh Gupta and Ju Ming will be on display from 14 September to 1 November.

Leading off the sales of property from Dr. Arthur Sackler’s collections on 16 September is a diverse group of Chinese Furniture, mostly huanghuali wood and dating to the 17th and 18th centuries – late Ming and early Qing dynasties. Among the highlights is a Rare Pair of Huanghuali Compound Cabinets with Hat Chests and Two-Drawer Bases, 17th / 18th century (est. $120/180,000). Three-part cabinets of this size and quality were reserved only for the wealthiest and most prominent families, and their rarity is enhanced by the fact that very few sets have survived together into modern times. Each component features matching aprons and feet, features that are extremely fine and rare for compound furniture of this type.

Highlights from Sotheby’s sale of Fine Chinese Ceramics and Works of Art include an Important Pale Celadon Jade Brushpot (Bitong) dating to the Qing Dynasty in the 18th century (est. $300/400,000) that was purchased in the 19th century by famed jade collector Herber R. Bishop and has remained in the Bishop family since then. Also on offer is a Mother-of-Pearl Inlaid Black Lacquer Wine Table (Jiu Zuo) from the Wanli period of the Ming dynasty from the Gordon Getty Collection, which was formerly in the collection of Mrs. Nelson A. Rockefeller (est. $400/600,000). The sale will also feature a single-owner sequence of Property from the Manheim Collection led by an Impressive Blue and White ‘Dragon’ Jar dating to the Wanli period that had been on loan to The Metropolitan Museum of Art for over forty years (est. $150/250,000)

Featured in the September 17 sale of Indian Art is a collection of Indian Miniatures from the Estate of Dr. Ananda K. Coomaraswamy, led by a rare work from a Panchatantra Album, circa 1780-90 (est. $50/70,000). Highlighting the modern works in the sale is an Untitled oil on canvas by V.S. Gaitonde estimated at $400/600,000, which will be offered alongside works by artists such as Tyeb Mehta, M.F. Husain and F.N. Souza. Among the contemporary works on offer is a Zarina cast paper depiction of a Lotus (est. $7/10,000) and an Untitled pen and ink work on paper by Nasreen Mohamedi (est. $8/12,000).

Sotheby’s Hong Kong 2009 Autumn Sales will be held from 3 to 8 October and will offer over 2,000 lots with an estimated value of approximately HK$741 million (US$95 million). Of particular note, a number of private collections boasting impeccable provenance will come to the fore, including wine from two superb American single-owner collections: The Classic Cellar from a Great American Collector III and An Exceptional Cellar from a Private American Collector. Over 6,000 bottles will be offered with a combined estimated value of HK$30/45 million (US$4/6 million).

On 8 October, Sotheby’s Hong Kong will hold its Chinese Ceramics and Works of Art Sale including Water, Pine, and Stone Retreat Collection – Qianlong, a single-owner collection consisting of Imperial works of art and objects of Qianlong Reign. Highlights will include An Imperial Knife with a Rhinoceros Horn Scabbard, Mark and Period of Qianlong (expected to fetch in excess of HK$8 million, US$1 million) and A Han Dynasty Jade Bi in an Imperial Zitan Mount, Mark and Period of Qianlong (est. HK$6/8 million, US$800,000/1 million).

Other highlights of the series of sales include An Outstanding Imperial Carved Zitan ‘Ten Dragon’ Throne, Qianlong Period (est. HK$20/30 million, US$2.6/3.8 million), A Superb and Rare Large Blue And White ‘Dragon’ Moonflask, Seal Mark and Period of Qianlong (est. HK$15/20 million, US$1.9/2.6 million), An Important and Superbly Carved Foliate Rim Cinnabar Lacquer Landscape Dish, Incised Mark and Period of Yongle (est. HK$8/12 million, US$1/.5 million), and Sanyu’s Lotus et Poissons Rouges (Lotus and Red Fish) (est. HK$15/25 million, US$1.9/3.2 million).

On 23 September Sotheby’s Paris will offer Photographs, Furniture and Works of Art from a Parisian Apartment on Avenue Montaigne. The sale is expected to reach in the region of €1.5 million ($2 million).

On 22 October Sotheby’s will offer for sale Leopold Carl Müller’s rediscovered depiction of A Street Scene, Cairo. The picture will be included in Sotheby’s sale of 19th Century European Art Including Orientalist Paintings, Drawings and Sculptures and is estimated at $600/800,000. The work boasts a spectacular provenance – it was purchased the year it was executed by William Henry Vanderbilt and descended in his family until its sale at Sotheby’s predecessor Parke-Bernet in 1945. Recently discovered in a private collection, its sale this fall represents an opportunity for collectors to compete for a superb work of Orientalist art with an illustrious provenance.

On 9 November Sotheby’s London will offer Nicholas Gysis’s, The Fortune Teller in its fall sale of Greek Art. The recently rediscovered work by an artist considered by many as the father of Greek 19th-century painting is expected to fetch £200/300,000 ($350/450,000).

On 21 November Aulden Cellars-Sotheby’s will sell a collection of wines direct from the legendary Spanish winemaker Bodegas Vega Sicilia owned by the Alvarez family. Following upon the tremendous success of Sotheby’s June 2009 sale in London featuring wines direct from the Cellars of Château Cheval Blanc, Sotheby’s once again brings collectors an unprecedented opportunity to acquire wines directly from one of the world’s greatest and most revered wineries. The sale will comprise 214 lots estimated at more than $350,000, with highlights including 436 bottles of the vineyard’s signature wine Vega Sicilia Único from 1921 to 1999 and five vertical selections, including a vertical collection of 41 bottles from 1921-1999, all signed by the winery’s general director Pablo Alvarez (est. $15/25,000). Sotheby’s sale will include not only wines from Bodegas Vega Sicilia, but also all of the wines from Grupo Vega Sicilia, which is led by Pablo Alvarez and includes Bodegas Alión, Bodegas Pintia, both in Spain, and Tokaj Oremus in Hungary.

The forthcoming Evening Watch auction to be held in Geneva in November will include a wide range of vintage and modern wristwatches as well as a large selection of pocket watches made by the most famous watch makers. The wristwatches section includes a fine and very rare white gold perpetual calendar split seconds chronograph wristwatch by Patek Philippe with register and moon-phases, 24-Hour and leap year indication, Ref. 5004G, circa 2005, estimated at CHF200/300,000 ($185/280,000). Among the pocket watches on offer is a very fine and rare yellow gold, enamel and pearl set open-faced duplex watch made for the Chinese market in circa 1820 (est. CHF60/80,000, $56/75,000).

The sale of Magnificent Jewels in Geneva on 17 November 2009 will include a sumptuous array of spectacular signed jewels, many with exceptional provenance, as well as fine gemstones. Among the highlights is a rare and highly important ruby and diamond rivière, from 1884, Property of Mary, Duchess of Roxburghe, estimated at CHF540,000/1.1 million($500,000/$1 million). The auction also features jewels from the Collection of Daisy Fellowes, notably a sapphire and diamond brooch, Cartier, London (est. CHF165/270,000, $150/250,000). The collection also includes other signed jewels by Cartier as well as pieces by Boivin.

On 30 November, Sotheby’s London will bring to the market the extraordinary and rediscovered collection of personal and rare objects, including many exquisite pieces of Fabergé, which belonged to Her Imperial Highness Maria Pavlovna, Grand Duchess Vladimir (1854-1920) and her late husband, His Imperial Highness Grand Duke Vladimir Alexandrovich (1847-1909) – son of Emperor Alexander II and brother of Emperor Alexander III. The sale will comprise around 100 lots of cigarette boxes and an extraordinary array of cufflinks, including many fine pieces of Fabergé, that bear ciphers, Imperial inscriptions and coats of arms and even photographs of the Vladimirs and their immediate family. Estimates for the objects in the auction – several of which are in immaculate condition – range from £80/120 ($150/200) up to £4/6,000 ($6/10,000) for a set of cufflinks, and for a cigarette box from £700/900 ($1,200/1,500) up to £70/90,000 ($120/150,000). The entire offering is expected to realise in the region of £1 million ($1.7 million)

Category: Auction News

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