NEW YORK—The booming art market continues to fuel record earnings at Sotheby’s, with first- quarter results hitting a high note. Historically the first quarter has been a loss period for the auctioneer because of the seasonal nature of the art market; major art auctions, which take place each May and November, typically register stronger earnings in the second and fourth quarters, respectively. However, in the latest report, for the three months ending March 31, results showed a marked improvement.
Sotheby’s said first-quarter income from continuing operations—a key measure of profitability—was $24.3 million, or 37 cents a share, compared with a loss of $3.9 million or 7 cents a share for the first quarter of 2006. First-quarter revenues were $147.4 million, up 54 percent from the previous year, largely due to higher auction commission revenues.
Sotheby’s said results were “significantly impacted by a onetime benefit of $20 million related to an insurance recovery” from a life insurance policy covering the late Robert Noortman, an Old Master dealer, whose business Sotheby’s acquired last June (ANL, 6/20/07), but who died unexpectedly in January.
Sotheby’s also realized a $4.8 million gain on the sale of its Billingshurst saleroom property in the U.K. These gains, though, were partially offset by a $15 million “impairment charge related to intangible assets and goodwill of Noortman Master Paintings.”
Without these items, income from continuing operations would have been $16 million, or 25 cents a share, Sotheby’s said.
CEO Bill Ruprecht notes that the house recently opened an office in Beijing and is opening an office in Moscow, as well as “establishing a greater presence in the Middle East so that we can better serve our clients in these increasingly important parts of the global art world.”