Sotheby's (NYSE: BID) today reported financial results for the second quarter and first half ended June 30, 2012. Sotheby’s reported second quarter 2012 net income of $85.4 million, a decrease of 33% from the prior year period, and total revenues of $303.9 million, down 18%, when compared to the prior year period. For the six months ended June 30, 2012, the Company reported net income of $74.8 million, a decrease of 42%, and total revenues of $408.9 million, down 16%, when compared to the prior year period. The lower levels of revenues and profitability in the current periods reflect a decrease in net auction sales when compared to the prior year periods and in particular, a 67% decline in single owner sales volume in the second quarter and a 55% decline in the first half.
The impact of the decline in total revenues is partially offset by reductions in total expenses of $13.6 million, or 8%, in the second quarter and $8.5 million, or 3%, in the first half. First half 2012 results are negatively impacted by incremental expense relating to resolution of the labor dispute with New York unionized art handlers, the bulk of which is for severance benefits to be paid to certain union members in exchange for their voluntary termination of employment. However, Sotheby’s management believes that future labor costs have been reset in an attractive and sustainable way.
“Our operating results reflect some tremendous successes, but also reflect the challenging global economy, a tough comparison to the best quarter in Sotheby’s history a year ago, and a competitive climate for high-end consignments,” said Bill Ruprecht, President and Chief Executive Officer. “Demand and prices remain strong, especially at the high end of the market, as reflected in our highest ever sale of Impressionist and Modern Art of $373.3 million in May in New York.
“We’re pleased to report that our Financial Services business grew substantially in the first half of 2012 and private sales are an increasingly important contributor to our revenue stream. We have seen a slowdown in the Asian market alongside the economy there, but it continues to be very profitable and a source of substantial opportunity for Sotheby’s.
“Art appears to remain an attractive asset for collectors and our consignment pipeline for the Autumn season is very active at the moment. We remain confident in the global art market and will, as always, seek opportunities to broaden and extend the breadth and depth of our relationships with our clients,” he added.
Second and Third Quarter Sales
Sotheby’s made auction history when Edvard Munch’s iconic masterpiece, The Scream, sold for $119.9 million at the Impressionist and Modern Art Evening Sale in New York in May – a new world record for any work of art at auction. The Evening Sale totaled $330.6 million, Sotheby’s highest ever total for a sale of Impressionist and Modern Art Worldwide and the second highest total for a Sotheby’s auction in any category.
In London in late May, Sotheby’s offered the collection of the late photographer Gunter Sachs in a
tremendously successful two-day sale that realized a total of $65.5 million, double the pre-sale low estimate with bidding from 17 countries across four continents. Among the sale’s most notable works was one of Andy Warhol’s last self -portraits, Self Portrait (Fright Wig), which sold for $8.5 million, and his large Flowers, which sold for $5.9 million.
Sotheby’s June London sales brought remarkable prices, including Joan Miró’s Peinture (Étoile Bleue) for $36.9 million, a record for the artist at auction for a piece from his seminal “dream paintings” series. Also highlighting the Impressionist and Modern Art sales was Pablo Picasso’s monumental late portrait Homme assis which brought $9.7 million. The Impressionist and Modern Art series brought a total of $139.9 million. The June 3 London Contemporary Art series brought a total of $129.7 million, with the top lot of Jean-Michel Basquiat’s Warrior bringing $8.7 million, nearly double the price it achieved at auction five years ago.
In addition, Sotheby’s Old Master and British Paintings sales realized a total of $60.3 million in London. The highlight of the Old Master Paintings evening sale was an historic naval scene by Willem van de Velde the Younger, The Surrender of the Royal Prince during the Four Days’ Battle, 1st-4th June 1666, which sold for $8.3 million and was purchased by a Dutch collector who intends to return the painting to its home in the Netherlands.