Sotheby’s have officially released their 2014 figures which show a (20%) adjusted Operating Income profit over the prior year, reflecting the continued strength of the global art market along with the benefit of management’s cost reduction initiatives.
With a turnover of $6.1b/£3.9 billion and after-tax basis, adjusted Net Income* is $142.4 million, an $11.6 million (9%) increase, as the improvement in operating income is partially offset by an increase in Sotheby’s effective income tax rate from 30% to 39% in 2014. Adjusted Diluted Earnings per Share* in 2014 is $2.03. Including charges associated with shareholder activism, restructuring and CEO transition, operating income, net income and diluted earnings per share for 2014 are $226.0 million, $117.8 million and $1.68, respectively. Fourth quarter 2014 net income is $74.0 million, or $1.06 per diluted share. Excluding $7.5 million in pre-tax charges principally associated with the CEO transition, Adjusted Net Income* is $78.4 million and Adjusted Diluted Earnings per Share is $1.12.
For the full year 2014, auction commission revenues improved $70.4 million (10%) due to an $812.5 million (19%) increase in Net Auction Sales, partially offset by a decline in Auction Commission Margin from 15.9% to 14.7% due to the competitive environment for winning high value consignments, as well as sales mix. Also, private sales commissions decreased 32% in 2014 as prior year results included a significant number of individual high-value transactions. In order to enhance revenue, strengthen auction commission margins and fund innovation, Sotheby’s enacted a new buyer’s premium rate structure that became effective 1 February 2015. Buyers at auction now generally pay 25% on the first $200,000 of hammer price; 20% on the portion of hammer price above $200,000 up to and including $3 million; and 12% on any remaining amount above $3 million.
“We had a remarkable 2014, with double digit sales growth in many of Sotheby’s key categories – including Impressionist & Modern Art, Contemporary Art, Jewelry, Old Masters and American Art, among others. These successes highlight the incredible depth and breadth of Sotheby’s expertise and demonstrate our ability to deliver for our stakeholders,” said Chairman, President and Chief Executive Officer Bill Ruprecht.
“That success has continued in 2015, with market-leading sales in Old Masters, Impressionist & Modern and Contemporary Art,” Mr. Ruprecht continued. “We have seen a 12% growth in global participation, a 42% increase in online buying across categories, and we have doubled our audience for live-stream auctions viewed on sothebys.com. We’re reaching more collectors, in more corners of the world, through more channels. It’s been a good start to the year.”
A number of cost reduction initiatives implemented by management throughout 2014 enhanced profitability. These initiatives resulted in a lower ratio of auction direct costs as a percentage of Net Auction Sales, savings in general and administrative costs and marketing expenses, and also helped contain full-time salary costs. A year ago, Management targeted $22 million** in savings in these areas in 2014 as compared to 2013. Assuming a similar level of Net Auction Sales as 2013, the cost savings ultimately achieved in 2014 effectively totaled $33 million**, or 50% more than originally projected.
Sotheby’s and RM Auctions, the world’s foremost collector car auctioneer, recently announced the formation of a new strategic partnership which will now be known as RM Sotheby’s, as Sotheby’s acquires a 25 percent ownership interest. This long-term investment comes as the more than $2 billion market for the finest automobiles continues to grow, presenting increasing opportunities for both companies. Over time, Sotheby’s will have the ability to expand its ownership stake as the partnership evolves and grows.
“We’re reaching more collectors, in more corners of the world, through more channels – highlighting the incredible breadth and depth of Sotheby’s expertise and our ability to deliver for our stakeholders.”- Chairman, President and CEO Bill Ruprecht
Sotheby’s auction sales increased 19% in 2014 compared to the prior year. Worldwide Auction Sales reached $6.1 Billion – highest total ever. More than one-third of selling categories achieved record totals.
One-third of the buyers in Sotheby’s worldwide sales were new to Sotheby’s, accounting for almost one-fifth of global sales.The Collection of Mrs. Paul Mellon achieved $218 million, the highest total ever for a single owner sale at Sotheby’s. More Chinese clients purchased $1 billion across worldwide sales rooms.
Record Totals Achieved in 14 Categories, representing one-third of the categories in which Sotheby’s sells, including: Contemporary Art: $1.7 billion, up 20.3%. Impressionist & Modern Art: $1.4 billion, up 26.7%. Jewelry: $602.5 million, up 13.8%.Watches: $107.2 million, up 10.9%.
Sotheby’s are now the market leaders in Impressionist & Modern Art: $1.4 billion, Chinese Works of Art: $333.5 million, Chinese Contemporary Art: $250 million, Old Master and British Paintings pre1850: $300 million, British Paintings: $185.3 million, American Art: $138.2 million, African & Oceanic Art: $86 million, 20th Century Design: $74.4 million, Wine: $65.3 million, Photographs: $44.2 million.
Record for any auction ever held in London – £186.4 million / $280.2 million, Top Impressionist & Modern Art lot of the series at any auction house:“Venice,LeGrandCanal” by Claude Monet – £23.7 million / $35.6 million. London Evening Sale Achieved 14% higher results compared to last year. • 24%ofEvening Sale Buyers new to the category.
Contemporary Art: London: £140.4 million / $214 million Highest Contemporary Total at any auction house this year. “Abstraktes Bild”by Gerhard Richter – £30.4 million / $46.3 million. Contemporary Evening Sale Achieved 40% increase compared to last year.