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TOKYO—Panasonic Corp. scrapped its ¥ 10 trillion ($89 billion) revenue goal, citing a slowing Chinese economy and a continuing commitment to pursue profit rather than just scale.

"The ¥ 10 trillion revenue was rather a symbolic flag to encourage every member of Panasonic to think about how we should achieve growth," Chief Executive Kazuhiro Tsuga said at a news conference Thursday. But profit, he said, better reflects the contribution to customers the company should focus on.

The goals he laid for the fiscal year ending March 2019— the target year of the abandoned revenue goal, coinciding with the company's 100th anniversary—are an operating profit of ¥ 500 billion and net profit of ¥ 250 billion. For the fiscal year just ending, Panasonic expects an operating profit of ¥ 410 billion and net profit of ¥ 180 billion, on ¥ 7.55 trillion in revenue.

When Mr. Tsuga took the top job in 2012, Panasonic was coming off a net loss of ¥ 772 billion. He pledged to turn around the Osaka-based electronics company by chopping off low-margin units and nurturing profitable business-to-business enterprises. It was a clear shift in strategy for Panasonic, which had been fighting fiercely competitive South Korean rivals for market dominance in consumer electronics. The company scaled back its flagship television business and stopped selling smartphones.

That is why analysts and investors were puzzled when Mr. Tsuga in 2014 mapped out the project to hit ¥ 10 trillion, a goal set but not reached by some of his predecessors. It seemed like a reversal for Mr. Tsuga, though he stressed at the time that the added revenue should be accompanied by higher profits.

"If you want to just achieve ¥ 10 trillion goal, you could have bought some unprofitable companies but with large revenue," said Yu Okazaki, an analyst at Nomura Securities. The puzzlement might partly explain why Panasonic's market cap falls short of that of its closest rival, Sony Corp.—which was slower to fight bloat—¥ 2.5 trillion to ¥ 3.7 trillion.

"Withdrawing the stretched target should help investors look at Panasonic's strategy more rationally," Mr. Okazaki said.

Challenges await Panasonic, but the company is on track for growth, analysts say. The key is replicating the sort of success enjoyed by its highly profitable U.S.-based Panasonic Avionics unit, which sells airlines in-flight entertainment systems and communication platforms connecting its cabin crews and ground crews.

Among its recent initiatives, Panasonic is providing batteries forTesla Motors Inc., joining the car maker in building a big battery factory in the U.S., and has begun slowing expanding to home batteries on its own. Last year it bought Hussmann Corp., a U.S. maker of display cases and refrigeration systems for retailers—a business in which Panasonic has a major presence in Asia.

Panasonic is also pursuing opportunities in areas from security cameras to advanced driver-assistance systems—perhaps too many areas, analysts say.

"Panasonic planted many seeds of business and that's good, but it may want to start picking up few best ones to focus on," said Akie Iriyama, an associate professor at Waseda Business School.

In improving its business-to-business operation, Panasonic is beefing up M&A to speed growth of promising business units such as Avionics. Its efforts include hiring Eiichi Katayama, formerly a top electronics analyst at Bank of America Merrill Lynch in Tokyo, earlier this year. Mr. Katayama said in February that his job includes advising Mr. Tsuga which business units to focus on.

Though the consumer market may not be as profitable as the business market, Mr. Tsuga has been stressing its importance as a source of stable profitability—a contrast to the approach of fellow electronics giant Toshiba Corp., which gave up most of its consumer-appliance businesses in trying to escape financial troubles.

In Japan, Panasonic is a major provider of home appliances such as refrigerators, rice cookers and even hair dryers. Its TV unit is expected to turn a profit in the fiscal year ending Thursday—the first in eight years.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

(END) Dow Jones Newswires

March 31, 2016 08:55 ET (12:55 GMT)

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