The company said operating expenses for its new ventures and a $3.4m (11%) fall in revenues from Sotheby’s Financial Services were the reason for the fall in profit.
Total revenues for the second quarter rose to $314.9m. For the six months to the end of June, the firm’s profit was $65.6m and total half year revenues grew 24% to $502.4m.
Consolidated sales at the auction house — the figure that includes artworks sold at auction, those from its inventory (artworks it owned from offering guarantees at auction) and those sold in private sales — were up 2% for the second quarter and up 4% for the first half of 2017 to $2.83bn. This compares to a figure of $3bn (£2.35bn) for rival Christie’s.
Chief executive Tad Smith said: “Overall, the quarter was solid… we are absolutely delighted with the many things going on inside Sotheby's to position us strongly for the future."
In the weeks leading up to the results Sotheby’s share price reached a record high due to investors anticipating improved figures for the firm.
The wider art market in 2016 saw the results of large auction firms hit by a decline in supply, rather than a fall in demand. The sector was knocked by uncertainty ahead of the US election and the EU Referendum in the UK.
The start of 2017 however has been stronger across the industry.
Smith highlighted an “improvement in the performance of our guarantees in the auction room”.
Its auction commission margin was flat for the quarter at 16.3%, compared with 16.4% last year. Smith said this result was good considering “the substantially larger number of lower margin, higher priced fine art pieces sold in the major evening sales in New York and London” in the period.
The number of lots above $1m was up 5% and total average hammer price for these lots was up 17%.
Smith, who joined the firm in March 2015, added that “the market for fine objects is healthy and efficient but neither frothy nor depressed”.
Sotheby’s results in numbers
rise in number of lots above $1m
increase in the total average hammer price for these $1m+ lots
rise in first half private sales to $333.8m
rise in number of new clients in the first half of 2017
rise in overall clients in second quarter of 2017
rise in the average hammer price purchase
of lots sold to online buyers in first half, versus 19% a year ago and 13% two years ago
online only sales last year - on track to double that in 2017
sell-through rate in online only sales in first half compared to 62% in 2016
of buyers at online only sales were new clients
rise in business in the Americas in the second quarter – the region now largest by dollar volume, replacing Asia
growth in Europe and 3% growth in Asia in the second quarter