* ThyssenKrupp to become diversified industrial group
* CEO wants to reduce dependence on steel sector
* Says still wants to exit stainless steel business
* Says such major restructuring takes time
BOCHUM, Germany, Jan 17 (Reuters) - Steel maker ThyssenKrupp's Chief Executive Heinrich Hiesinger asked shareholders to be patient on Friday as he completes what is proving to be a troublesome overhaul of the company.
Since becoming CEO three years ago, Hiesinger has been trying to shift the focus of ThyssenKrupp, once a symbol of Germany's industrial prowess, from the volatile steel sector to higher-margin products and services such as elevators, industrial plants and high-performance car parts.
His efforts, however, have been besieged by setbacks. ThyssenKrupp has posted three straight years of losses, its deteriorating finances forced it to ask shareholders for cash, major deals have been only partly successful, and compliance issues have emerged that have been both costly and embarrassing.
"This restructuring, this fundamental renewal, will take time," he told investors at ThyssenKrupp's annual shareholders' meeting.
After repeatedly extending the deadline to find a buyer for ThyssenKrupp's Steel Americas business, Hiesinger was able to sell only half of it, a processing plant in the U.S. state of Alabama, leaving the company with a loss-making steel mill in Brazil.
And almost a year after completing the sale of stainless steel unit Inoxum to Outokumpu of Finland, ThyssenKrupp announced in November it would have to take back parts of that business - the Terni steel plant in Italy and the VDM alloy unit - as Outokumpu struggled to refinance.
"Our strategic decision to exit the stainless steel business still stands, even if we are now having to take the long way round," Hiesinger said.
Steel production already accounted for less than 30 percent of sales last year, down from just 42 percent before Hiesinger took over, and he vowed to keep up the diversification effort.
Hiesinger wants to return ThyssenKrupp to long-term profitability by investing in services and engineering businesses, focusing on growing economies in Asia and Latin America and moving into new customer segments to lessen dependence on steel processors and carmakers.
But his time is running out. His contract is due to run out in September 2015, and some shareholders have voiced concern that Hiesinger over-promised when he took the job.
"The story with which you tried to enthuse the capital market didn't work. We would like to see a clear strategy," Union Investment fund manager Ingo Speich said at the shareholders' meeting.
In addition, activist Swedish fund Cevian has built up a stake of 11 percent, while the family foundation that has shielded managers from predators has seen its holding diluted below a blocking 25 percent.
Shares in ThyssenKrupp were nevertheless up 3.7 percent at 19.39 euros at 1156 GMT, the biggest riser on Germany's blue-chip Xetra DAX index, as Hiesinger confirmed the group was expecting adjusted operating profit to rise to 1 billion euros this year from about 600 million a year earlier.
The stock has fallen around 40 percent since Hiesinger became CEO as prospects for the steel sector have remained weak and the company has paid no dividend two years in a row.