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Sotheby’s see fall in revenue in skewed third quarter results

09 November 2009Written by ATG Reporter

DAMIEN Hirst and juggled dates have severely skewed Sotheby’s third quarter results for 2009, contributing to a fall in revenue of 41 per cent year-on-year to $44.9m.

Hirst’s Beautiful Inside my Head Forever sale, held as Lehman Brothers crashed in September 2008, boosted the company’s third quarter results last year by £95.6m.

This time around there was no such initiative to bolster the figures.

Equally the London contemporary art summer sales were this year moved from the third to the second quarter and so do not contribute to this latest set of results.

The general downturn in the market also played its part in the fall in sales.

On the plus side, auction guarantees did not cast the shadow over business that they have done since the autumn of last year. The company say they saved $51.5m on guarantees during the first nine months of 2009, $45.5m of it in the third quarter.

Any impact from outstanding guarantees hanging over from the boom times has now disappeared.

Cost cutting has also helped improve the picture, with operating losses for the period down by a third to $38.3m. However, the overall fall in revenue, together with a $10.8m increase in provision for the company’s income tax, led to a net loss of $57.8m, compared to $47m for the third quarter of 2008.

As prices drop and more lots sell in the lower price brackets, Sotheby’s make a better margin on the buyer’s premium. Other factors also come into play. Here they declared a rise in margins from 15.2 per cent for the third quarter of 2008 to 22.7 per cent in 2009.

Despite the quarter’s losses, it shows an improvement on the rest of the year so far. Sales are down 70 per cent year-on-year and net losses for the first nine months of 2009 were $80.1m, compared to a net profit of $35.8m for the same period in 2008. That was the result of a 49 per cent fall in revenues.

Again, better cost control ($137.8m, or 31 per cent down), improved auction commissions and considerable savings on guarantees helped soften the blow.

Chief executive Bill Ruprecht was bullish about what he saw as an improving market.

By Ivan Macquisten

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