The third quarter is traditionally the company’s smallest revenue-generating quarter and is almost always loss-making. For the three months to the end of September, Sotheby’s reported a net loss of $23.5m, a figure which compares to the $54.5m loss for the equivalent period last year.
Most of this improvement was due to the scheduling of the latest Hong Kong auction series, part of which occurred in the third quarter in 2017 rather than wholly in the fourth quarter as in previous years.
The five-day series of 18 auctions achieved a $404.1m total, of which $82m fell into the third quarter this time. The total was 42% up on the same series last year.
The Hong Kong sales were led by a rare 900-year-old vessel from the Northern Song Dynasty that was knocked down at HK$260m (£24.9m), a new auction for any Chinese ceramic.
The company also reported improved results from “inventory activities” (ie: selling works it had previously owned due to guaranteed works being bought in). The combined value of works in Sotheby’s inventory had stood at $215m in December 2015 but it has now dropped to $63m which the company described as a “more economically rational level”.
The firm also recorded an unusual $7.4m income tax benefit due to a potential tax liability being reversed.
Sotheby’s chief financial officer Mike Goss said: “I share the view that we are seeing a relatively healthy market and are encouraged by the prospects for our upcoming sales in New York and Geneva. At the same time, we think it is prudent to wait and see how these huge sales actually perform over the next few weeks before we raise our expectations for the year.”
Indeed, November will be a key month for Sotheby’s. Its Impressionist & Modern auctions in New York has a low estimate of $245m and the Contemporary art sales immediately following have a $323m low estimate.
Sotheby’s results: In Numbers
Sotheby’s reported a net loss of $23.5m for the third quarter of 2017. The figure compares to a net loss of $54.5m for the equivalent period last year. Most of this improvement was due to the scheduling of the latest Hong Kong auctions, some of which occurred in the third quarter rather than the fourth quarter in 2017.
The total from the five-day series of 18 auctions in Hong Kong at the end of September and the first week of October was $404.1m, a 42% increase year-on-year and 20% more than the sales held in April.
Sotheby’s sold a similar number of lots in the first nine months of 2017 compared to 2016 but saw an 8% increase in net auction sales.
Sotheby’s reported a 26% increase in the number of first-time bidders and a 15% increase in all transacting clients for the nine month year-to-date period.
Over the same nine-month period, Sotheby’s reported a 12% increase in the average number of bidders per lot.
Sotheby’s auction commission margin was up 0.7% for the first nine months of 2017. This is a key figure for auctioneers as it represents the average commission they take across all lots sold.
The combined value of works in Sotheby’s inventory is now down to $63m from $215m in December 2015.
The October Contemporary Art sales in London coinciding with the annual Frieze Art Fair generated $114.1m, a 10% improvement on Sotheby’s equivalent figure for 2016.