* Q1 underlying EBIT 247 mln euros vs average forecast of 213 mln euros
* Brazil's underlying EBIT loss 17 mln euros vs year ago loss of 122 mln
* Net debt 4.5 bln euros at end-Dec vs 5 bln at end-September
* Shares rise 4 percent to top of DAX index
By Maria Sheahan
FRANKFURT, Feb 14 (Reuters) - ThyssenKrupp posted a better than expected quarterly operating profit on Friday, as it reined in losses at its steel mill in Brazil and also benefited from robust demand for cement and petrochemical plants.
Its net loss for the fiscal first quarter through December widened on one-off charges related to the sale of a stake in Finnish steelmaker Outokumpu, but ThyssenKrupp said it still aimed to approach break-even this year.
Shares in ThyssenKrupp were up 3.9 percent at 20.46 euros by 1037 GMT, making them the top gainer on Germany's blue-chip DAX index, which was up 0.5 percent.
ThyssenKrupp has been trying to return to long-term profitability by investing in services and engineering businesses and reducing its dependence on the volatile steel sector.
It already generates more than 70 percent of sales from industrial businesses making products ranging from car parts to elevators, submarines and fertiliser plants, compared with less than 60 percent when Chief Executive Heinrich Hiesinger took the helm three years ago.
But Hiesinger's turnaround efforts at ThyssenKrupp have been besieged by setbacks. The company 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.
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 it with the loss-making mill in Brazil.
He also unexpectedly announced in November that ThyssenKrupp would have to take back parts of stainless steel business Inoxum, which it had sold to Outokumpu almost a year earlier.
As part of the deal, ThyssenKrupp sold its 30 percent shareholding in Outokumpu at a steep discount, resulting in charges that widened the German group's first-quarter net loss to 69 million euros from a year-earlier 16 million.
First-quarter adjusted earnings before interest and tax (EBIT) more than doubled to 247 million euros ($337.6 million), beating even the most optimistic estimate in a Reuters poll of analysts.
The adjusted EBIT margin widened to 2.7 percent from 1.2 percent as ThyssenKrupp made more money from powertrain and chassis sales to carmakers and saw continued demand for cement and petrochemical plants.
Earnings at its steel businesses meanwhile remained depressed, with losses in Brazil shrinking but not turning to profits yet and low steel prices weighing on earnings in Europe.
"We are seeing demand in southern and eastern Europe improve, especially in the automotive industry ... but there is still high pressure on prices," finance chief Guido Kerkhoff told reporters in a conference call following the results.
Eventually ThyssenKrupp is expected to have another go at selling the Steel Americas mill in Brazil and the assets it took back from Outokumpu - the Terni steel plant in Italy and the VDM alloy unit - but it has some restructuring to do especially in Brazil and at Terni before any buyer will agree to a deal.
ThyssenKrupp affirmed an outlook for group sales to grow by a medium single-digit percentage in its full fiscal year through the end of September, while adjusted EBIT will jump to about 1 billion euros from 599 million and further improve in 2014/15.
"After 247 million euros in the first quarter, the is a chance that EBIT can exceed the current consensus," Baader Bank analyst Christian Obst said. Reuters consensus for full-year adjusted EBIT is 1.04 billion euros.
Proceeds from the sale of the Alabama plant should further reduce net debt from 4.5 billion euros at the end of December, ThyssenKrupp said.