* EBITDA up 28 percent, sales down 2 percent
* Group to propose dividend for 2011, subject to conditions
* Shares rise 4.9 percent
(Adds shares, analyst upgrade, background)
By Georgina Prodhan
LONDON, Jan 13 (Reuters) - European newspaper group Mecom raised its 2010 core profit by 28 percent thanks to continuing cost cuts, lifting its shares on Thursday despite ongoing uncertainty over its leadership.
Mecom confirmed veteran newspaper executive David Montgomery would step down as chief executive by the end of January and said it would make a further announcement regarding succession shortly. Shareholders had pushed for his departure.
Under Montgomery, Mecom shares had plunged from a peak of 6,784 pence in July 2007 to a low of 66 pence by November 2008, as the company piled on debt to consolidate European assets, only to have to dispose of some again when recession hit.
The company said on Thursday it intended to propose an inaugural dividend for 2011, subject to a court-approved capital reduction or other necessary reorganisation, thanks to improving cash generation as capital expenditure and exceptional charges fall.
Mecom's 2010 earnings before interest, tax, depreciation and amortisation were about 155 million euros ($202 million), above the SmartEstimate of 139 million from Thomson Reuters StarMine, which ranks estimates by analysts' past record.
Mecom shares rose 4.9 percent to 251.75 pence by 0856 GMT, outperforming a 0.4 percent-weaker European media index and continuing an improving run that began with an upgrade from brokerage Collins Stewart on Jan. 7.
London brokerage Numis raised its target price to 400 pence to 348 pence and kept its "buy" recommendation, saying earnings were considerably better than it had expected.
Revenue fell 2 percent, with advertising down 4 percent and circulation up 1 percent. Mecom did not give a sales figure, but a decline of 2 percent from last year's total gives 1.38 billion euros, above the SmartEstimate of 1.22 billion euros.
Mecom, which owns regional newspapers and websites in the Netherlands, Denmark, Norway and Poland, said it had saved 60 million euros or 5 percent of its costs and expected to make continued improvements to EBITDA in 2010.
Mecom rebuffed an all-share merger proposal from British publisher Trinity Mirror several weeks ago, a source familiar with the situation told Reuters on Wednesday, confirming a Sky News report.
Both Mecom and Trinity Mirror declined to comment. (Editing by David Holmes and Jon Loades-Carter) ($1=.7665 Euro)