Sotheby's 4th-Quarter Profit Jumps 46% as Sales Surge
Date: 26 Feb 2008 | | Views: 3223
Source: Bloomberg (www.bloomberg.com), by Linda Sandler
Sotheby's, one of the two largest art sellers, said fourth-quarter profit soared 46 percent on higher auction totals in New York and London and an influx of new buyers.
Net income for the three months ended Dec. 31 jumped to $102.4 million, or $1.55 a share, from $70.3 million, or $1.09, a year earlier, New York-based Sotheby's said today in a statement. Revenue rose 31 percent to $345.8 million.
Analyst Jody Kane of Sidoti & Co. had forecast net income of $1.33 a share. George Sutton of Craig-Hallum Capital Group LLC estimated profit at $1.50 a share.
"Over the past five years, the number of clients buying at the top end of our business has increased by more than 200 percent,'' Sotheby's Chief Executive Officer William Ruprecht said in the statement.
Contemporary art, including a $46 million Francis Bacon picture, became Sotheby's biggest auction business last year, with the total doubling to $1.3 billion, the company said. The value of impressionist and modern-art sales rose 24 percent to $1.2 billion.
To attract sellers, Sotheby's promised minimum prices for their art. A $19.1 million loss on guarantees was more than offset by $77 million in auction commissions on guaranteed works in 2007, Chief Financial Officer William Sheridan said on a conference call today.
An auction house profits if a work sells for more than the guaranteed amount, just as it loses money if the art fetches less than the sum promised to the seller. In the third quarter, Sotheby's had a $14.6 million pretax loss on guaranteed art.
Fourth-quarter salaries and related costs rose 49 percent, as Sotheby's boosted pay to compensate executives for the strong results, the company said.
The value of art sold by Sotheby's in 2007 was $6.2 billion, up 51 percent, according to company data. The spurt enabled Sotheby's to catch up with its rival Christie's International, owned by the French billionaire Francois Pinault.
Most analysts expect lower earnings starting in the first quarter, as losses in the financial markets cut collectors' budgets.
"Trends are likely to be choppier going forward,'' analyst Dana Cohen at Banc of America Securities said in a Feb. 5 report.
Sotheby's shares today rose $1.27, or 3.9 percent, to $34.17 in New York Stock Exchange composite trading. In after-hours trading, they fell $1.17 to $33 at 4:36 p.m. New York time.
Tomorrow, Sotheby's plans to sell as much as 102.9 million pounds ($204 million) of contemporary art in London. That's about twice the size of last year's February sale.