Sotheby’s, the auctioneer of fine art and collectibles, said second-quarter profit gained 31 per cent as improved margins offset a slowing art market.
Net income rose to $89 million (€80.3 million), or $1.52 a share, from $67.6 million, or 96 cents, a year earlier. Revenue fell 10 per cent to $298.7 million (€269.7 million) on a drop in net auction sales.
"While we would certainly prefer to see a stronger art market, we are pleased with the progress we have been making on our strategic initiatives and the beneficial changes to our team and organisation," said Tad Smith, Sotheby's president and chief executive.
Improved margins
Margins improved to 16.4 per cent and compensation costs fell 51 per cent. That made up for a 16 per cent drop in net auction sales driven by reluctance of art owners to part with their prized works amid volatility in the financial markets.
Sotheby’s impressionist and modern art auction in May tallied $144.5 million, its worst showing at an evening sale in the category in New York since the 2009 recession.
The comparison of the current- and prior-year periods was also influenced by a change in the timing of the summer contemporary art sales in London, which were held in the second quarter of 2016 after occurring in the third quarter in 2015. Sotheby’s adjusted earnings of $1.51 a share exceeded the $1.04 average estimate of analysts in a Bloomberg survey.
The auctioneer reported earnings before the start of trading in New York. Sotheby’s shares are up 25 per cent this year through August 5th, compared with a 6.8 per cent gain for the SandP 500 Index.
The shares rose 18 per cent last month after Taikang Life Insurance disclosed a 14 per cent stake in Sotheby’s on July 27th and said it may seek board representation.
Chen Dongsheng, Taikang Life's chairman and chief executive, is also the founder and president of China Guardian Auctions, China's second-largest auction house.
Taikang's filing follows a May disclosure that Singapore-based Sotheby's shareholder Shanda Payment Holdings was poised to increase its stake.
