Annual profit at Mighty River Power rose by two-thirds, due to lower costs and higher sales.
The newly-listed power company, in which the Government has a 51% stake, says the drought had a major effect on hydro generation, but that was offset by diversifying into geothermal generation.
In its first result since its listing, Mighty River Power's net profit exceeded its prospectus forecasts.
It made $115 million in the year to June, an increase of 69% compared with the previous year.
Total generation fell 9% due to the drought, which resulted in lower hydro volumes.
But chair Joan Withers said the company has a competitive advantage in having geothermal power stations and being able to buy power cheaply in the wholesale market.
Sales grew 5% after attracting more commercial customers.
Ms Withers said she is disappointed with the share price which has fallen by as much as 13% below its issue price of $2.50.
Investors will get a dividend payment of 7.2 cents per share.
The Government sold 49% of Mighty River Power through a float in May priced at $2.50 per share.
Shares traded as low as $2.16 on Monday.
Fund manager Brian Gaynor says the better than forecast profit will give a boost in confidence to investors considering buying shares in the next state-owned partial float - Meridian Energy.
Mr Gaynor says it will take some time for Mighty River Power shares to get back to the issue price but in the meantime the result should boost investor confidence in Meridian, which the Government will float in November.
The Labour and Green parties are using the result to criticise Mighty River Power's partial sale, saying taxpayers are missing out on dividends that belong to them.
Greens co-leader Russel Norman says the result shows taxpayers are worse off by $2.3 million per week, that will be paid in dividends.
Dr Norman says even after accounting for the $1.7 billion the Government got for the partial sale it would have been better to hold on to the company in its entirety.
"You would have to be a financial idiot to get rid of an asset that returns 11% in order to avoid debt that costs 3%."
But Finance Minister Bill English says the Government still owns 51% of the company and is still getting the benefit of more dividends.
He put Mighty River Power's improved result down the fact it was partially floated five months ago.
Mr English says if the Greens and Labour really believe that it would have been better to keep the company, they will be promising to buy it back.
Labour's State Owned Enterprises spokesman Clayton Cosgrove has dismissed Mr English's arguments as bunkum.
He says it's not surprising Mighty River Power has made an improved profit as it was a good company when it was partially sold.
"The sad thing is a $140 million worth of dividends won't go into the public purse to benefit all New Zealanders; just a wealthy few and much of that will go offshore."