UPDATE 3-Grupo Mexico net profit plunges on lower metals prices


* Sees no impact from Southern Copper judgment

* Shares retreat after modest gains

MEXICO CITY, Oct 24 (Reuters) - Mexican copper miner and railroad operator Grupo Mexico reported a third-quarter profit on Wednesday of $311 million, down 54 percent on a double-digit decline in metals prices.

Earnings in the same period last year totaled $676 million.

The company said revenue for the July-September period was $2.4 billion, compared with $2.8 billion in the same period last year. Grupo Mexico files results to the Mexican stock exchange in dollars.

The company said that for the quarter silver prices were down 22.5 percent, molybdenum prices were down 19.2 percent, lead prices were down 19.6 percent, and copper prices were down 13.4 percent.

Net income for the company's mining division was hardest hit, down $443.5 million, or 64.8 percent, in the quarter.

Sales for the first nine months reached $7.688 billion, down 3 percent year on year.

``It's a weak report as expected,'' said Juan Baptista Bruny, a Mexico City-based analyst with BBVA Bancomer.

The company said copper production was up 9.1 percent during the first nine months of the year, in large part because of a 19 percent increase in output at its flagship Buenavista mine, previously known as Cananea.

Compared with the same quarter last year, copper output was down nearly 2 percent, Molybdenum output was down 6.5 percent, and gold output was down 12.8 percent.

At Grupo Mexico's Toquepala mine in southern Peru, Molybdenum production fell 38 percent for the quarter. Molybdenum is a metal that is commonly used as a component in alloyed steel.

The company, which paid a $2 billion legal judgment to Southern Copper Corp earlier this month, said the net impact of the judgment totaled about $395 million.

Grupo Mexico, which owns about 80 percent of Southern Copper, said in its report that it continues to disagree with the judgment but that it ``represents no significant economic effect on the company's financial situation.''

The company's chief financial officer, Daniel Muniz, said on Wednesday that Grupo Mexico sees no further legal action in the case since the Delaware Supreme Court affirmed the lower court's $2 billion judgment in late August.

``We don't have an additional remedy to take,'' Muniz said on a conference call with analysts, implicitly rejecting an appeal to the U.S. Supreme Court. ``That's why we decided to ... comply with the judgment and put this behind us.''

Despite the decline in metal prices, Grupo Mexico cast its industry's future in a positive light, noting an 81 percent increase in its own investment projects compared with the same period last year.

``We believe the fundamentals in our industry will remain solid, mainly due to the lack of (metals) supply,'' the company said in its report.

Grupo Mexico said it would pay a cash dividend of 0.26 Mexican pesos per outstanding share on November 7, a figure that BBVA Bancomer's Bruny said he had expected to be higher.

Shares traded 0.43 percent lower at 41.27 pesos on Wednesday afternoon on the Mexican stock exchange.