Newspaper group Metro Q2 profit falls, market gloomy

STOCKHOLM, July 21 (Reuters) - Free newspaper group Metro International (MTROsdba.ST) reported a bigger-than-expected 83 percent fall in quarterly operating earnings on Monday, hit by weak sales and advertising.

The company, which publishes newspapers in more than 150 cities, posted a second-quarter operating profit of 600,000 euros ($950,800) compared with 3.6 million euros a year earlier. The mean forecast in a Reuters survey of five analysts was for operating earnings of 3 million euros.

The company said that while its performance in most markets had been "quite good" in the period, losses accrued during the quarter in the United States and Spain, as well as in Denmark and Canada, weighed on group results.

Sales in the quarter fell 4.1 percent to 77.3 million euros amid what Metro said were "difficult market conditions". Analysts expected 85 million in sales.

"Conditions for advertising in Europe and North America are gloomy, regardless of the category," it said in the report.

"Markets for advertising in paid-for titles have been hit badly in some countries - particularly U.S., UK and Southern Europe - and less so in other markets in Northern Europe."

But it added the outlook for its business in South America, Asia and Russia was "much brighter" with spending on advertising seen growing significantly, in some areas by double digits.

"With this mixed outlook Metro is obviously most vulnerable in the U.S., Canada and Europe. Hence, the defined strategy to grow in Asia, South America and Russia becomes even more relevant," it said in a statement. (Reporting by Stockholm Newsroom; Editing by David Cowell)