* Q2 EBIT 370 million euros, beats estimates
* Says stabilising trend continued in second-quarter
* Says cost savings "beginning to bear fruit"
* EBITDA margin target reiterated (Adds CFO comments, details)
By Aaron Gray-Block
AMSTERDAM, July 29 (Reuters) - Dutch chemical group Akzo Nobel NV reported a 12 percent fall in second-quarter core profit on Wednesday, but beat analysts' estimates as cost savings partly offset lower sales volumes.
The world's biggest paint company reported earnings before interest and taxes (EBIT), excluding one-off items, of 370 million euros, above the average forecast of 267 million in a Reuters poll but down from 422 million euros in the same period last year.
Akzo Nobel said early indications in March that markets might be stabilising continued into the second quarter.
"However, this gradual stabilisation is at significantly lower levels than 2008. With the exception of some emerging markets, we see little significant recovery of growth," Chief Executive Hans Wijers said in a statement, adding forward visibility still remained limited. Akzo Nobel, which is targeting 540 million euros in cost cuts by end-2011, said it was still focusing on savings and that this was beginning to bear fruit.
U.S. rival PPG Industries posted forecast-beating second-quarter profit earlier this month after "aggressive cost-cutting".
PPG said there were signs markets had stabilised and that demand would modestly improve in the third quarter.
Akzo Nobel said it remained committed to achieving its medium-term target of an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 14 percent by the end of 2011, up from 12.2 percent at end-2008.
Its EBITDA margin improved to 14.4 percent in the second quarter from 14.1 percent in the same period last year and 9 percent in the usually weaker first-quarter.
Akzo Nobel Chief Financial Officer Keith Nichols told reporters the company was seeing some relief from lower raw materials prices, which had a positive impact on the company's improved margin, but stressed cost savings were the prime contributing factor in the margin development.
"It's nice to be away from that inflationary bubble that we experienced in the second half of 2008," Nichols said.
But it was still a tough market, he said, with sales volumes falling 16 percent. Turnover fell 10 percent to 3.668 billion euros, but beat the average estimate of 3.537 billion euros.
On a divisional basis, EBIT at Decorative paints and Specialty Chemicals missed analysts' estimates, while Performance Coatings clearly beat expectations. (Reporting by Aaron Gray-Block, editing by Will Waterman)