Sotheby’s reported a sharp decline in its financials, with core earnings down 88 percent and auction sales falling by 25 percent in the first half of 2024, according to the Financial Times.
Sotheby’s annual first-half results, revealed via an internal document distributed to investors and reviewed by the FT, show that the company encountered fiscal challenges before securing an investment deal with Abu Dhabi’s sovereign wealth fund (ADQ). The agreement was announced last month.
Last month, Sotheby’s disclosed that the sovereign wealth fund would acquire a minority stake in the auction house, which went private in 2019, providing $1 billion in additional capital. The cash infusion was meant to aid the auction house in managing its debt.
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The slowdown in the art market has been starker than in the luxury sector, which saw sales from buyers in China drop significantly, impacting Sotheby’s and its competitor Christie’s, which generate around 30 percent of sales from Asia. In July, Christie’s reported its H1 auction sales were down 22 percent from the second half of 2023.
Sotheby’s revealed that its earnings before interest, taxes, depreciation, and amortization (Ebitda)—a measure of operating performance before financing, tax, and accounting decisions are factored in—dropped to $18.1 million, an 88 percent decrease compared to the previous year. After accounting for additional costs, the adjusted Ebitda fell 60 percent to $67.4 million. Revenue for the first six months of 2024 decreased by 22 percent, to $558.5 million.
The investment from ADQ includes $700 million earmarked for Sotheby’s to reduce it’s debt load, with the company carrying more than $1 billion in long-term debt, according to the document. The funding agreement with ADQ is expected to close in the fourth quarter of 2024.
Sotheby’s did not immediately respond to ARTnews’s request for comment.
