State-owned Meridian Energy Ltd has reported a rise in interim profit and said it is on track to beat last year's annual underlying profit under mostly hydrology conditions.

The $142.5 million net profit after tax in the six months to December 31 is a turnaround from a $20.5m loss in the same period last year. The profit after tax before fair value movements in financial instruments and other one-time items is $118.7m, up from $84.6m last year.

Revenue fell 17 per cent to $925.5m. The company had an 18 per cent increase in hydro generation, a 105 per cent increase in wind generation and a 2 per cent decrease in retail sales.

The company paid a dividend of $263.9m to the Government in October last year and the board is yet to decide an interim dividend.

Meridian chief executive Tim Lusk said last year was severely impacted by adverse hydrological conditions. Improved hydrology and hydro storage this year allowed increased generation, albeit at lower prices.

Meridian was confident it was on track to achieve its targets, which would see underlying profit for the full year exceeding last year's result under most hydrology conditions, Mr Lusk said.

"While we have not had the problems of previous years we have had our challenges this year, with a wet winter and a much more competitive retail environment, and to have achieved this result which is line with our targets is very encouraging indeed."

The most significant development during the period was a government decision to transfer the Tekapo A and Tekapo B hydro stations from Meridian to state-owned Genesis Energy, with Meridian receiving the thermal reserve plant at Whirinaki.

"Meridian has always supported the overall objectives of the ministerial review to improve the electricity market in New Zealand. We are engaging fully with all of the relevant stakeholders to ensure the successful implementation of the review decisions."

Mr Lusk says the company was confident that its strategic focus on renewable energy remained a sound basis for its future growth.