SAO PAULO, Aug 18 (Reuters) - German steel and industrial group ThyssenKrupp AG believes in an eventual rebound of Brazilian economic growth and is betting local manufacturers will demand the type of steel it produces there, Chief Executive Officer Heinrich Hiesinger said on Monday.
ThyssenKrupp was unable to sell its Brazilian steel mill, known as CSA, which has struggled with losses due to cost overruns and operational challenges.
With the sales process officially closed, the company has intensified its efforts on resolving those problems and boosting returns, Hiesinger said in a breakfast meeting with journalists.
“My original commitment was that CSA would be profitable in the next business year, 2014-15,” he said, highlighting strong potential growth in the U.S. market. “I think in one year we are there.”
He added that the company still plans to sell CSA in the mid to long term, although it is not currently in negotiations.
Last week ThyssenKrupp raised the outlook for its financial year ending in September to “break-even to slightly positive net income,” boosted by an unexpected quarterly profit at CSA.
Faced with a weak global market for steel, ThyssenKrupp said it would focus sales efforts from CSA on the local Brazilian market, where it hopes to differentiate itself through higher-quality slabs than most local producers can supply.
“For high-end, specific grades, I think there is an interest in the market,” Hiesinger said, though he declined to provide sales projections.
Brazil’s economy has slowed sharply and is expected to grow just 0.79 percent this year and 1.2 percent in 2015, according to a central bank poll of analysts on Monday.
“We are not afraid to overcome one or two more challenging years because I strongly believe in the fundamentals here in Brazil,” Hiesinger said, pointing to the country’s abundant natural resources and favorable demographic trends.
Still, he said he hopes to see Brazil enact reforms to improve business conditions, including streamlining its often cumbersome tax process. (Reporting by Asher Levine; editing by Gunna Dickson)