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SEOUL—Samsung Electronics Co. reported its most profitable quarter in two years Thursday, as strong sales of its flagship Galaxy S7 smartphone helped offset a drop in profit on sales of semiconductors and display panels.

Samsung said it earned 5.85 trillion Korean won ($5.2 billion) in net profit during the April-June period, a gain of 1.7% from a year earlier, while operating profit rose 18% from a year earlier to 8.14 trillion won. Revenue rose 4.9% to 50.9 trillion won.

The strong quarter comes in contrast to that of Apple Inc., which reported a 27% drop in quarterly profit Tuesday, its second consecutive quarter of falling revenues.

As Samsung has shown signs of stability in its core smartphone business, investors have rewarded it by pushing its stock up to its highest levels in more than three years, within a hair's breadth of a record high.

Samsung's mobile division earned 4.32 trillion won in operating profit, up 56% from a year earlier.

Research firm Canalys estimates Samsung shipped about 80 million handsets in the second quarter, accounting for about 24% of the overall market, while Apple shipped roughly 40 million iPhones for a 12% share. China's Huawei Technologies Co. came third, with 31 million units shipped for a 9% market share.

Huawei said Tuesday it shipped about 60.6 million smartphones in the first half of the year, up 25% from a year earlier, and was on pace to hit its target of 140 million smartphones for the full year.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

(END) Dow Jones Newswires

July 27, 2016 21:25 ET (01:25 GMT)

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