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They now intend to reduce staff levels by a further 15 per cent worldwide by this time next year, with other savings from restructuring and revising facilities arrangements. The total target for savings in 2009 is $100m.

The 52 per cent drop in fourth quarter revenues reflected a dramatic collapse in auction sales turnover down from $1.9bn in 2007 to just $1bn in 2008. That also meant that the net profit of $102.4m for the last quarter of 2007 became a net loss for the same period in 2008 of $8.5m.

These unfavourable results were cushioned by a dramatic fall in costs: a saving of $71m as the salary bill fell by 45 per cent, thanks to redundancies, and bonus payouts dropped by 75 per cent.

Over the year as a whole, aggregate sales – taking in private treaty sales and dealer revenue as well as auctions – totalled $5.3bn, a 14 per cent decline on 2007, with turnover amounting to $691.6m, a 25 per cent decrease.

Auction sales turnover was $4.9bn, 51 per cent to Christie’s 49 per cent of market share between the two leading auction houses.

Hardest hit were annual profits, down 87 per cent from $184.9m to just $28.3m, largely, say the company, to the fourth quarter crash.

Higher borrowing costs and a higher effective tax rate contributed to Sotheby’s woe.

“The global economic crisis which erupted in the autumn of 2008 had a major impact on our business in the fourth quarter,” said Bill Ruprecht, President and chief executive of Sotheby’s. “For the first nine months of 2008, our aggregate auction sales were at record levels. But from October onwards, virtually every auction around the world experienced declines.

“As a result, we immediately took steps to strengthen our business. We began a worldwide restructuring, initiated global cost-cutting measures and dramatically curtailed the use of guarantees. To date in 2009, auction commission margin is 17.3 per cent, up 27 per cent from the 13.6 per cent in the first quarter of 2008.”

He said Sotheby’s continued to make strategic investments in the business, most notably the repurchase of their flagship headquarters in New York last month, which has allowed them to renegotiate mortgage interest rates down from 10.4 per cent to 5.6 per cent, an estimated $4m saving in 2009 alone.

By Ivan Macquisten