Samsung Electronics, the world's second-largest mobile phone maker, reported a 72 percent drop in first quarter profit as the global economic crisis continued to curb consumer demand, though its handset margins have beaten those of market leader Nokia.

The South Korean company said it earned $463.5 million in January-March this year, compared to $1.63 billion a year ago. Quarterly sales rose 8.5 percent to $13.87 billion from $12.78 billion a year earlier.

The results were an improvement over the fourth quarter reports last year, when Samsung posted its first-ever net loss.

By focusing on high-end phones, Samsung said its handset margins surged to 12 percent from 2 percent in the previous quarter -- overtaking market leader Nokia's 10.4 percent margin.

"The global economy is likely to continue to recover in the second quarter but lingering uncertainty means it is difficult to predict a sharp improvement in demand or the business environment in the near term," said Robert Yi, Samsung's vice president of investor relations.

Last week Nokia posted a 27 percent drop in quarterly sales and a first-ever pretax loss.

LG Electronics, the world's third-largest handset maker, said on Tuesday its mobile sales would rise more than 10 percent this quarter from the previous three months.

Fourth-ranked Sony Ericsson reported heavy losses and said it would cut 2,000 workers.

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