(Bloomberg) -- General Electric Co. climbed as new boss Larry Culp pledged a rebound in cash flow next year after a “reset” in 2019.

While the company could burn as much as $2 billion this year as it tries to restore its battered balance sheet, free cash flow from GE’s manufacturing businesses has “significant” likelihood for improvement over the next few years, the chief executive officer said Thursday.

“It’s clear that we have work to do,” Culp said on a call with investors after GE revealed its 2019 forecast. “But it’s work we can do.”

The comments eased investor fears that Culp stoked last week by warning that the company would post negative industrial free cash flow this year while trying to revive the ailing power business. While both cash and profit will remain weak in 2019, the upbeat longer-term view suggested that Culp is confident he can right the ship as he nears the six-month mark as CEO.

“GE has line-of-sight on a sequential improvement in industrial free cash flow to net positive in 2020 and further acceleration in 2021,’’ Deane Dray, an analyst at RBC Capital Markets, said in a note to investors. “This is the biggest positive disclosure.’’

GE rose 3.6 percent to $10.38 at 10:03 a.m. in New York. The shares gained 32 percent in 2019 through Wednesday, recovering a portion of last year’s 57 percent loss, the worst annual decline since at least the early 1970s.

The turnaround still faces a number of obstacles, including $25 billion in borrowing that matures in 2020.

“Simply put, we have too much debt,” he said.

What Bloomberg Intelligence Says

General Electric’s credit ratings and outlook may be at risk following the company’s 2019 guidance, which is below consensus and will likely lead to missed rater expectations. Ratings companies anticipate positive free cash flow.
-- Joel Levington, credit analyst
Click here to view the research

As a part of its deleveraging plan for this year and next, GE is considering buying back debt through a tender offer, though it didn’t specify the amount. GE only has about $1 billion coming due this year. The company doesn’t plan to issue new debt, which could be used to refinance outstanding obligations, until 2021.

Culp still hasn’t shaken the cash troubles that have plagued GE throughout its slump. Free cash flow from the manufacturing units will be zero to negative $2 billion this year, the Boston-based company said, far below the $4.5 billion generated in 2018.

Power Drain

The drain will be most pronounced in the power business, where cash flow will be worse than last year’s $2.7 billion outflow. It will also be down in the renewable-energy and health-care units, GE said. Cash flow will be little changed in the jet-engine business.

Investors keep a close eye on industrial free cash flow, which is considered an indicator of the health of GE’s nonfinance businesses.

For five key takeaways from GE’s outlook call, click here

Fixing power is a top priority for Culp, who has already split the business in two and brought back former GE executive John Rice to chair the gas operations. The company is now dismantling the power-unit headquarters and expects a 20 percent reduction in costs over the next two years.

The business, which makes and services gas turbines, has struggled with a range of problems, from poor management, to technical issues, to falling demand for gas power. GE also made an ill-timed acquisition of Alstom SA’s energy business, which contributed to a $22 billion charge last year.

Culp has said it will take several years to return the business to health. While cash flow will still be down next year, GE expects improvement and a return to positive territory in 2021.

Adjusted earnings will be 50 cents to 60 cents a share this year, GE said. Wall Street had been anticipating 67 cents, according to the average of analysts’ estimates compiled by Bloomberg.

©2019 Bloomberg L.P.