A series of massive art auctions, including the sale of Leonardo da Vinci's Codex Hammer to Bill Gates for £19.2m, pushed turnover at Christie's International to record levels.
Profits, however, remained static due to pressure on the commission paid by vendors and rising costs at the London-based auction house, said Christopher Davidge, chief executive.To tackle the commission problem, the company yesterday announced a more rigid price scale. This leaves the market waiting until next week for results from Sotheby's, Christie's main competitor, to see if a price war will break out .
"They are making an attempt to stem the competitive rot," said Guy Bell of Beeson Gregory, stockbrokers. "If Sotheby's do not follow suit, they could be in deep water."
Christie's scored a number of landmark sales last year. It auctioned the £12m Assyrian relief from Canford School; is preparing for Pamela Harriman's sales; and provided art for an increasing number of wealthy Far Eastern entrepreneurs. The total value of art that passed through Christie's hands increased 12.3 per cent to £820m. Hong Kong sales were particularly strong, rising 65 per cent.The commission earned on these sales, from both purchasers and vendors, rose from £146m to £167m.
However, like-for-like pre-tax profits rose only marginally, from £16.2m to £16.4, held back largely by a 13 per cent rise in total costs. Auction costs rose 16 per cent to £103m because of a significant increase in the marketing budget, which included taking the Lord Cholmondeley Houghton collection on a worldwide tour, and printing expensive brochures. Day- to-day administrative expenses also increased, by 13.6 per cent, partly because of wage inflation and a rise in remuneration costs.
To meet demand in the emerging economies, the group opened last year new offices in Shanghai, Bombay, Santiago and Kuala Lumpur.
Shares in the auction house, which have fallen from a high of 250p in January 1994 to 143p, fell a further 5p yesterday on news of the results.
Mr Davidge confirmed that Joe Lewis, a Nassau-based investor, had taken a 5.9 per cent stake. Christie's has been the subject of many potential takeover bids: Recently, stakes had been taken through John Ashcroft's ADT group and a Japanese consortium, Aska. However, Mr Davidge re-asserted his belief that Mr Lewis's stake had been taken for "long-term investment purposes".