(Bloomberg) — General Electric Co. missed Wall Street’s sales expectations for the fourth quarter as it grappled with worsening supply-chain pressures, a stumble for Chief Executive Officer Larry Culp as he readies a plan to break up the conglomerate.

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Revenue in the period slipped to $20.3 billion, GE said Tuesday in a statement, below the $21.4 billion average of analysts’ estimates compiled by Bloomberg. That dragged GE’s shares down the most in 10 months despite cash flow that outpaced expectations and an increase in profit margins.

“We’ve got some short-term issues to work through but we feel very good about the setup coming into 2022,” Culp said in an interview. While he cited supply-chain challenges in the health-care unit as well as uncertainty over the U.S. wind production tax credit, the company expects to return to sales growth this year.

The uneven results capped a transformational year for the nearly 130-year-old manufacturer, as Culp continued the dismantling of GE’s troubled financial services business, slashed debt and set plans to split it into separate jet engine, hospital equipment and power machinery businesses. The Boston-based company has also been dealing with the effects of a pandemic that has upended the aviation industry.

GE’s shares fell 6.5% at 9:38 a.m. in New York after an earlier decline of 8%, the biggest intraday slide since March 11. The stock gained 2.6% this year through Monday, outpacing the 3.9% decline in a Standard & Poor’s index of U.S. industrial companies. Shares of Raytheon Technologies Corp., which competes with GE in the engine market, slipped 1% Tuesday after reporting sales that missed expectations.

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What Bloomberg Intelligence says:

“Performance in 4Q21 appears light of targets, while free-cash-flow guidance for 2022 is consistent with our expectations and framework that a trip back to single-A is unlikely to occur this year.”

— Joel Levington, Director of Credit Research

Click here to read the research.

GE’s adjusted earnings were 92 cents a share in the period, GE said, above the 84-cent average of analysts’ estimates. Free cash flow generated by GE’s industrial divisions — a metric closely watched by the company’s investors — was $3.8 billion, compared with the $3.29 billion expected by analysts.

The cash flow performance was a positive during the quarter, but “the bottom line is that GE reported a sizeable 4Q21 revenue miss,” Deane Dray, an analyst with RBC Capital Markets, said in a note.

GE Power managed a 6.6% segment margin despite a 10% decline in revenue, highlighting the impact of operational improvements Culp has emphasized during his time as CEO. The business that primarily makes and services power turbines fueled by natural gas has been one of the company’s biggest headaches in recent years.

Sales in GE’s aviation unit rose 4% in the fourth quarter to $6.08 billion, short of the $6.74 billion expected by analysts. The business has been under pressure since the pandemic led to a decline in air travel, hurting airlines and aircraft-equipment manufacturers alike. The industry has started to rebound, though a coronavirus resurgence due to the omicron variant has threatened the recovery.

Renewables Pressure

Conditions worsened at GE’s renewable energy business, which principally makes wind turbines, as sales slipped 5.6% and missed estimates. While the company expects the push for carbon-free electricity will fuel long-term demand, Culp has said inflationary pressures facing the unit will intensify in 2022, especially for key materials such as steel and resins at its onshore wind business.

For the full year, adjusted margins for the conglomerate expanded by 4 percentage points to 6.5%.

GE also offered its first outlook for 2022, forecasting organic revenue growth, which strips out items such as acquisitions or currency effects, of high single digits. Industrial free cash flow may rise to as much as $6.5 billion in 2022, while adjusted earnings could be as much as $3.50 a share.

(Updates with share trading, analyst comment beginning in fifth paragraph)

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