Samsung Profits Are Up, Thanks to Its Galaxy 7 Smartphone

Samsung performed better than expected at the beginning of what it has said will be a tough year, thanks to a product that recently has been its Achilles’ heel: smartphones.

The South Korean electronics maker said on Thursday that its operating profit for the first three months of this year rose about 10 percent over the same period a year ago. The increase was slightly less than the fourth quarter’s, but better than many analysts had expected. Much of that performance came from sales of its curvy new Galaxy S7 smartphones, analysts said.

The results indicate that even as the company has faced moderating growth, it has the potential to surprise with new products that catch consumers’ eyes.

Samsung probably cannot return to the heady days of 2013, when strong smartphone sales powered its transformation into a global device company and helped it make nearly $10 billion a quarter. But the strong smartphone sales are a welcome return to form for a part of the company that has been squeezed at one end by cheap Chinese smartphone makers and at the other by Apple.

“Sales will start to stabilize not because Samsung is doing anything new, but because all the bad things that happened to them have already happened,” said Ben Thompson, an independent technology analyst at Stratechery.com.

Mr. Thompson said the major factors that hurt Samsung — including Apple’s release of a handset in China’s largest telecom service provider, China Mobile, and its decision to offer a big-screen iPhone — are in the South Korean company’s rearview mirror.

“There is a population that wants a high-end Android phone, and the reality is Samsung is good at making hardware,” he said, referring to the operating system that many of Samsung’s phones use. “They make a good phone.”

Samsung said that operating profit would be 6.6 trillion won, or about $5.7 billion, in the fourth quarter compared with 6.0 trillion a year earlier. The numbers released Thursday are preliminary; Samsung will post its final earnings later this month.

Another factor helping Samsung has been a change in the way the company manages its new product rollouts, said Peter Yu, a BNP Paribas analyst. Last year, the company missed strong demand for its Edge series of phones, in part because it imitated Apple’s hype-filled product release, and early sales of limited supplies that sell out, Mr. Yu said.

This year, Samsung limited the number of countries where it was releasing the phones, and made sure it had already shipped phones across many of its channels, he said.

“There was a better sell through this year compared to last year,” Mr. Yu said.

“There was a production issue too,” he added. “Now that they have climbed the learning curve, the production is there. So they have the production, the costs are lower and without those constraints they found that the Edge is selling better than they thought.”

While smartphone sales have helped solidify earnings, the company is still likely to face weak demand for its components this year on soft global demand for electronics. The conglomerate, whose products include smartphone screens, memory and microchips, has been broadly exposed to economic weakness.

This year, Samsung also has to work to replace some of the microchip business it had with Apple, which it lost when Apple shifted orders to its Taiwan semiconductor rival TSMC.

Even so, analysts expect Samsung, which has leading technology in sectors like screens and memory chips, to perform better whenever conditions improve.