In a trading statement, the group pinned the loss of customers on a high number of long-term contracts coming to an end. It said it will launch “new propositions” in the second quarter to stem the losses.
The company reiterated that 3,000 jobs are expected to go in 2016, helping to bring down costs by £200 million over the year.
Last summer Centrica announced plans to reduce its head count by 4,000 – shedding 6,000 jobs but creating another 2,000 – as part of a drive to slash annual cost by £750 million by 2020.
The job losses revealed today bring the total cuts made so far to 2,800.
British Gas’ business unit returned to profitability, after making “continued progress on cash collection”, following problems with a new billing system last year.
Centrica chief executive Iain Conn said: “We continue to make good progress in implementing our strategy, and with improving levels of customer service, good operational performance, lower costs, and the launch of new products to help customers manage their energy usage, we remain on track to deliver against our 2016 targets.”
Adjusted operating cash flow is expected to be in excess of £2 billion in 2016. The group plans to spend no more than £1 billion on capital investments, with £500 million going towards the exploration and production side of the business. Net debt fell to £4.4 billion, down from £4.75 billion at the end of last year.
Analysts at investment firm Jefferies said: “Cash and capital management are central to the investment case for Centrica. The reiteration that the company expects operating cash flow in excess of £2 billion in 2016 should provide dividend yield support for the share price.
“The loss of 220k customers in Q1 is a potential concern. Centrica states that Q1 was an unusual quarter due to the number of fixed price contracts rolling off. We will have to wait and see whether this explanation proves correct.”
Utilities analyst at Whitman Howard, Angelos Anastasiou, said: “We still believe that Iain Conn and his team are moving Centrica in the right direction, with the trading update reinforcing this view.”
Centrica is due to release interim results for the first half of the year on 28 July. Group profits fell by 12 per cent in 2015, according to its full-year results released in February.