* Akzo says operating profit to be flat this year
* Q3 operating profit below analyst estimates
* Shares languishing below PPG takeover proposal
* Still planning special dividend, chemicals sale (Recasts to focus on Akzo's missed promise, adds detail)
By Toby Sterling
AMSTERDAM, Oct 18 (Reuters) - Paint maker Akzo Nobel warned its operating profit would not grow at all this year, in a further retreat from performance promises made to investors to fend off a 26-billion-euro ($31 billion) takeover approach in May.
The Dutch company blamed the downgrade in full-year earnings forecasts, the second in two months, on disruption caused by hurricane Harvey, rising raw materials costs and "headwinds" at its marine coatings business as the offshore oil industry remains weak.
The maker of Dulux paint insisted on Wednesday it would meet other promises made during its defence against suitor PPG Industries, including the sale or IPO of its Specialty Chemicals Division by early next year and the payment of a one-time dividend of 1 billion euros ($1.18 billion) on Dec. 7.
New Akzo CEO Thierry Vanlancker's position looks secure for the time being. PPG has indicated little appetite for another takeover attempt and activist investor Elliott Advisers -- Akzo's biggest shareholder which tried to push it into PPG's arms -- has agreed to put aside disputes with Akzo's boards for now and support the sale of the chemicals division.
Vanlancker stuck to longer-term financial targets made by his predecessor Ton Buechner in the heat of the takeover battle, including an operating profit (EBIT) margin of 15 percent by the year 2020.
That margin is currently below 12 percent and analysts are sceptical, though Akzo said on Wednesday it would cut 110 million euros in costs in 2018.
"A second profit warning in six weeks calls into question how achievable the ... 2020 EBIT targets are," said UBS analyst Geoff Haire, who has a "neutral" rating on Akzo shares.
Akzo shares traded 1.8 percent lower at 76.93 euros at 1126 GMT, well short of PPG's 95 euro proposal.
MANAGEMENT CHANGES Akzo has struggled since refusing PPG's advances, seeing both its CEO and CFO resign for health reasons.
Vanlancker blamed "adverse foreign exchange, ongoing industry specific headwinds and supply chain disruptions," as well as Harvey, for the change in EBIT outlook.
He told reporters that rising pigment costs would continue to squeeze profit margins in paints for the coming 5-6 months as the company passes on cost increases to customers.
UBS said Akzo's biggest business, industrial coatings, would need sales growth of 4 percent to achieve the 2020 target, while organic growth has averaged just 1 percent since 2012.
Vanlancker said the company has received interest from both strategic and private equity buyers for Specialty Chemicals, which represents around a third of sales and profits and is expected to fetch around 10 billion euros. He said it was too early to say how serious strategic buyers may be.
Reuters reported this month that only private equity buyers are interested in buying the division.
After PPG walked away from buying Akzo on June 1, it is restricted from approaching the company again until December, though it has indicated it is no longer interested in Akzo. Its bid faced nationalist rhetoric from the company's boards, employee unions and Dutch politicians.
Akzo on Wednesday scheduled an extraordinary shareholders meeting for Nov. 30 to approve the sale of the chemicals unit, the appointment of Maarten de Vries as CFO, and the approval of two new board members.
Akzo said that investor USS, the British pension fund, has proposed an alternative to one of the board candidates backed by Akzo. Shareholders will be able to choose between USS candidate Eric Maurice, a former CEO of ASML, and Akzo's candidate, Covestro CEO Patrick Thomas.
USS and Elliott declined to comment.
Akzo reported third-quarter operating earnings of 383 million euros ($451 million), down from 442 million euros in the same period a year ago and well shy of a consensus analyst estimate of 432 million euros.
The company warned last month that it would not hit an April goal of 100 million euros in EBIT growth, citing cost inflation and currency factors. ($1 = 0.8506 euros) (Reporting by Toby Sterling; Editing by Keith Weir and Tom Pfeiffer)