UPDATE 2-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 fall in metals prices.

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

The company said revenues for the July-September period were $2.4 billion, compared to $2.8 billion in the same period in 2011.

Grupo Mexico files results to the Mexican stock exchange in dollars.

For the quarter, the company said, 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 hit hardest, 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.

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

But compared to 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, added that the judgment ``represents no significant economic effect on the company's financial situation.''

Despite the drop 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 also said it will pay a cash dividend of 0.26 Mexican pesos per outstanding share on November 7, a figure that BBVA Bancomer's Bruny said he expected to be higher.

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