New York CNN Business  — 

General Electric warned on Thursday that 2019 will be another brutal year, but CEO Larry Culp vowed to confront the storied conglomerate’s problems “head on.”

Dragged down by its beleaguered power division, GE (GE) is bracing for up to $2 billion of negative free cash flows from its industrial businesses. That would mark a sharp deterioration from 2018, when the maker of MRI machines, jet engines and power plants generated $4.3 billion of free cash flow.

GE expects adjusted profits of 50 cents to 60 cents in 2019. That’s below Wall Street’s target of about 70 cents per share.

“GE’s challenges in 2019 are complex but clear,” Culp said in a statement. “We are facing them head on as we execute our strategic priorities to improve our financial position and strengthen our businesses.”

GE pledged to continue shrinking its corporate presence, a significant shift in the way the company does business. GE said its total corporate headcount has plunged by 36% over the past year – and more actions are “underway.”

Culp expressed optimism about the future. GE said it expects adjusted industrial free cash flows to be positive in 2020 and the pace of improvement to accelerate in 2021.

Investors took the news in stride. GE’s stock moved higher Thursday morning, as investors had already been anticipating the difficult 2019 outlook.

‘Too much debt’

After getting clobbered the prior two years and booted out of the Dow, GE shares have spiked almost 40% in 2019. Wall Street is betting the GE crisis is over, aided by Culp’s effort to swiftly raise cash by unloading a slew of long-held businesses. Last month, GE agreed to sell its BioPharma business to Danaher (DHR), Culp’s former company, for $21.4 billion.

GE reiterated in a presentation to analysts on Thursday that the company has “too much debt.” But executives promised to clean up the balance sheet and reduce the company’s uncomfortably high leverage.

The biggest problem continues to be GE Power, the division that makes turbines for power plants. GE Power’s natural gas turbines have been slammed by the industrywide shift towards renewable energy – a challenge magnified by a supply glut at GE.

Cash flow at GE Power will shrink in 2019. Next year’s cash flow will be “significantly better,” but still negative, GE warned.

“Starting to see progress” at GE Power, the company said, but it’s “early in a multi-year journey.”

Aviation is a bright spot

Another sore spot in GE Capital, the remnants of the conglomerate’s once-vaunted financial arm. Hurt by its insurance business, GE Capital isn’t expected to break even until 2021. GE promised to dump another $10 billion of the division’s assets to further shrink its debt.

GE struck a more optimistic note on its healthcare and aviation businesses. The company said it will continue to “play offense” in those two healthier divisions amid “steady growth” there in 2020 and 2021.

GE Aviation, which makes jet engines, should continue to see “continued strength” thanks to the robust commercial and military aviation markets, GE said.