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SEOUL, South Korea (AP) — Samsung Electronics Co. said operating profit declined to a two-year low in the second quarter, hit by the strong local currency and slowing demand for smartphones in China.

The result highlights how dependent the company has become on smartphones for its earnings. Sales growth in high-end Android devices has waned after several years of rapid expansion. Growth remains robust in emerging markets where cheap competitors have sprung up.

The South Korean electronics giant said Tuesday its operating income was 7.2 trillion won ($7.1 billion) for the three months ended June 30, down 24 percent from a year earlier. That was significantly below analysts' expectations of about 8 trillion won. The company releases its full quarterly financial results later in the month.

The figure was the lowest since the second quarter of 2012 when Samsung's income was 6.5 trillion won. Since then, Samsung's operating profit hasn't fallen below 8 trillion won, largely driven by robust sales of Galaxy smartphones.

Quarterly sales fell 10 percent from the previous year to 52 trillion won.

Samsung, which usually doesn't elaborate on its financial performance until its full report later in the month, issued a rare statement to explain its result, which Nomura analyst Chung Chang-won described as "very disappointing."

The company blamed the lower profit on the South Korean currency's appreciation against the U.S. dollar and the euro, as well as most emerging market currencies. The won hit a 6-year high against the U.S. dollar earlier this month.

It also said sales of medium- and low-end smartphones were weak in China and in some European countries because of stronger competition and sluggish demand. Fewer consumers in China bought handsets that run on 3G mobile networks as they waited for faster 4G networks.

Samsung, which earlier this year vowed to aggressively expand its tablet sales, acknowledged it faced some challenges in selling tablet computers. Consumers weren't replacing their tablet PCs as often as smartphones, while smartphones with a giant screen of 5 or 6 inches, such as Samsung's Galaxy Note series, replaced demand for smaller tablets that measure about 7 or 8 inches.

"Expectations have been lowered on Samsung," said Will Cho, an analyst at KDB Daewoo Securities. "With intensified competition in the mid- and low-end smartphones, it will be tough to stay as lucrative as in the past."

About three in every 10 smartphones sold globally were made by Samsung in 2013 and the company's handset sales will likely improve during the current quarter. But Cho said how much profit it can take would be more important than how many handsets it can sell because most sales growth would come from cheap smartphones.

In the cheap smartphone market, Samsung faces an uphill battle against brands such as Xiaomi and Lenovo.

Xiaomi, an upstart Chinese company that is moving into other Asian countries, surprised the industry with its $100-level smartphones that were snapped up by fans. Counterpoint Technology Market Research said last month that Xiaomi's $130 smartphone Redmi was the most-sold mobile device in China in April, beating Apple's iPhone and Samsung's Galaxy.

Samsung shifted its focus to affordable smartphones, tablets and wearable devices, such as the Gear smartwatches, to offset falling profit but they are yet to arrest the declining earnings from smartphones and components in mobile devices that Samsung supplies such as memory chips and display screens.

Shares of Samsung traded 0.5 percent higher in Seoul as the company gave an outlook that appeared to reassure investors.

"The company cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup," it said. "Samsung expects stronger smartphone sales and this will have a positive impact on the company's display panel businesses."

But some analysts were not convinced about Samsung's long-term prospects.

"Though we anticipate some positive earnings impact for the component businesses (in the third quarter), we see growing uncertainty over Samsung's future earnings in the long-term," Chung, the Nomura Financial Investment analyst, said in a commentary.

Chung cited Apple's upcoming release of the iPhone 6, the increasing difficulty in standing out from a plethora of other Android devices and the falling appeal of premium smartphones, a reminder of the PC market that came to be flooded with cheap almost identical products.

Samsung is expected to announce an upgrade of the Galaxy Note series in the fall around the time when Apple usually upgrades its iPhone.

Your daily look at late-breaking news, upcoming events and the stories that will be talked about Tuesday:

1. GAZA BORDER VIOLENCE SPIKES

Militants fire dozens of rockets on southern Israel, and Israel responds with airstrikes amid fallout from the deadly abduction of a Palestinian teen.

2. WHO'S SEEKING FORGIVENESS FROM VICTIMS OF PEDOPHILE PRIESTS

Pope Francis meets with six Catholics who were sexually abused by members of the clergy, and vows to hold church leaders accountable for decades-long cover-ups of rape and molestation of youths.

3. RETAIL POT STORES OPENING IN WASHINGTON

The state's first two dozen recreational marijuana outlets will be able to start selling cannabis Tuesday morning.

4. WHERE UKRAINE FIGHTING COULD ERUPT NEXT

Separatist militants driven from eastern towns by the Ukrainian army are regrouping in Donetsk, a major industrial city of 1 million where pro-Russia rebels have declared independence.

5. PATHWAY TO US BARRED FOR UNACCOMPANIED IMMIGRANT CHILDREN

The White House says the children likely won't qualify for humanitarian relief, which would prevent them from being sent back to their home countries.

6. HOW GM'S GOOD INTENTIONS WENT BAD

The automaker aimed to install ignition switches that worked more smoothly, an engineer says, but a faulty design led to dozens of vehicle crashes and at least 13 deaths.

7. AFGHAN FINANCE MINISTER LEADS IN PRESIDENTIAL VOTE

But officials say no winner can be declared, since millions of ballots are being audited for fraud.

8. IN EUROPE, SOME ISLAMIC EXTREMISTS GET REHAB

Initiatives include school counseling, emergency hotlines and even programs to help find jobs for returning jihadists.

9. THE MAN IN THE MONKEY SUIT

Gymnast and stuntman Terry Notary plays more than 100 primates in the coming film, "Dawn of the Planet of the Apes."

10. JUDGE OKS DEAL TO PAY FORMER NFL PLAYERS FOR CONCUSSION CLAIMS

The settlement is designed to give $1 million or more to retirees who develop Lou Gehrig's disease or other profound neurological problems.

SEATTLE (AP) — Washington state issued its first retail marijuana licenses Monday a day ahead of the start of legal sales, and 21 hours before the only store licensed to sell in Seattle was set to open, a line was already forming.

At Cannabis City, where the owner wasn't planning to open his doors until noon Tuesday, a 65-year-old retiree named Deb Greene, showed up just before 3 p.m. Monday. She had a chair, sleeping bag, food, water and a 930-page book.

"I voted for it, and I'm just so excited to see it come to be in my lifetime," she said. "I'm not a heavy user, I'm just proud of our state for giving this a try."

The start of legal pot sales in Washington Tuesday marks a major step that's been 20 months in the making. Washington and Colorado stunned much of the world by voting in November 2012 to legalize marijuana for adults over 21, and to create state-licensed systems for growing, selling and taxing the pot. Sales began in Colorado on Jan. 1.

Businesses including Cannabis City, which will be the first and, for now, only recreational marijuana shop in Seattle, got word early Monday morning from the state that they were licensed marijuana dealers.

Owner James Lathrop had already worked into the night Sunday placing no-parking signs in front of his building, hoisting a grand-opening banner and hanging artwork.

"I've had a long day. It really hasn't sunk in yet," he said.

In a 2:30 a.m. Pacific time interview with The Associated Press, John Evich, an investor in Bellingham's Top Shelf Cannabis, which will also open Tuesday morning, said they were "pretty stoked."

"We haven't had any sleep in a long time, but we're excited for the next step," Evich said.

Randy Simmons, the state Liquor Control Board's project manager for legal marijuana, said the first two dozen stores were notified so early to give them an extra few hours to get cannabis on their shelves before they are allowed to open their doors at 8 a.m. Tuesday. The store openings are expected to be accompanied by high prices, shortages and celebration.

An AP survey of the licensees showed that only about six planned to open Tuesday, including two stores in Bellingham, one in Seattle, one in Spokane, one in Prosser and one in Kelso. Some were set to open later this week or next, while others said it could be a month or more before they could acquire marijuana to sell.

Officials eventually expect to have more than 300 recreational pot shops across the state.

As soon as the stores were notified Monday, they began working to place their orders with some of the state's first licensed growers. As soon as the orders were received, via state-approved software for tracking the bar-coded pot, the growers could place the product in a required 24-hour "quarantine" before shipping it early Tuesday morning.

The final days before sales have been frenetic for growers and retailers alike. Lathrop and his team hired an events company to provide crowd control, arranged for a food truck and free water for those who might spend hours waiting outside, and rented portable toilets to keep his customers from burdening nearby businesses with requests to use the restrooms.

At Nine Point Growth Industries, a marijuana grower in Bremerton, owner Gregory Stewart said he and his director celebrated after they worked through some glitches in the pot-tracking software early Monday and officially learned they'd be able to transport their weed 24 hours later, at 2:22 a.m. Tuesday.

"It's the middle of the night and we're standing here doing high-fives and our version of a happy dance," he said. "It's huge for us."

Pot prices were expected to reach $25 a gram or higher on the first day of sales — twice what people pay in the state's unregulated medical marijuana dispensaries. That was largely due to the short supply of legally produced pot in the state. Although more than 2,600 people applied to become licensed growers, fewer than 100 have been approved — and only about a dozen were ready to harvest by early this month.

Nevertheless, Evich said his shop in Bellingham wanted to thank the state's residents for voting for the law by offering $10 grams of one cannabis strain to the first 50 or 100 customers. The other strains would be priced between $12 and $25, he said.

The store will be open at 8 a.m. Tuesday, he said, but work remained: trimming the bathroom door, cleaning the floors, wiping dust off the walls and, of course, stocking the shelves.

At Cannabis City, despite the line already beginning to form, Lathrop wasn't planning to open before noon.

"Know your audience: We're talking stoners here," he said. "I'd be mean to say they need to get up at 5 a.m. to get in line."

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Follow Johnson at https://twitter.com/GeneAPseattle

BILLINGS, Mont. (AP) — A top federal wildlife official said there's too much uncertainty about climate change to prove it threatens the snow-loving wolverine — overruling agency scientists who warned of impending habitat loss for the "mountain devil."

There's no doubt the high-elevation range of wolverines is getting warmer, U.S. Fish and Wildlife Service Regional Director Noreen Walsh said. But any assumption about how that will change snowfall patterns is "speculation," she said.

Walsh told her staff to prepare to withdraw a proposal to protect the animals under the Endangered Species Act.

Wildlife advocates said the move was a bow to pressure from Western states that don't want wolverines protected. Walsh said her stance "has not been influenced in any way by a state representative."

More broadly, it points to the potential limitations in the use of long-range climate forecasts to predict what will happen to individual plant and animal species as global temperatures rise.

Walsh's comments were contained in a May 30 memo obtained by the Center for Biological Diversity, an environmental group. Fish and Wildlife Service spokesman Chris Tollefson confirmed that Walsh authored the document.

Agency Director Dan Ashe will have the final say, with a decision due Aug. 4.

Wolverines max out at 40 pounds and are tough enough to stand up to grizzly bears. Yet some scientists warn they will be no match for anticipated declines in deep mountain snows, which female wolverines need to establish dens and raise their young.

Federal biologists last year proposed protections for an estimated 300 wolverines in the Lower 48 states. At that time, Walsh said "scientific evidence suggests that a warming climate will greatly reduce the wolverine's snowpack habitat."

In the recent memo, she expressed the opposite view: "Due to the uncertainty of climate models, I cannot accept the conclusion about wolverine habitat loss that forms the basis of our recommendation to list the species."

Walsh, also a biologist, said she reached that conclusion after reviewing the latest science on wolverines and consulting with other agency officials.

Most of that science already was available when protections were first proposed, leading the Center for Biological Diversity to criticize the about-face.

The likelihood of climate change harming wolverines was too great to delay action because of any lingering uncertainties, said the group's climate science director, Shaye Wolf.

The government already has declared that global warming imperils other species, including polar bears, ringed seals and bearded seals.

"Climate change is driving some iconic species toward extinction, and many species are in trouble," Wolf said. "It's a very bad turn of events that the Fish and Wildlife Service has chosen to ignore the expertise of its own scientists" on wolverines.

Agency officials said Monday that Walsh's memo was just one step in its deliberations on the animal.

Once found throughout the Rocky Mountains and in California's Sierra Nevada mountain range, wolverines were wiped out across most of the U.S. by the 1930s due to unregulated trapping and poisoning campaigns. In the decades since, they have largely recovered in the Northern Rockies but not in other parts of their historical range.

In some areas, such as central Idaho, researchers have said suitable habitat could disappear entirely.

Wolverines are found in the North Cascades in Washington and the Northern Rocky Mountains in Idaho, Montana, Oregon and Wyoming. Individual wolverines have also moved into California and Colorado but have not established breeding populations. Larger populations persist in Alaska and Canada.

Officials from states including Montana, Utah and Idaho have objected to more protections, saying the animal's population has been increasing in some areas.

Two members of an independent peer review panel also raised questions about the science behind last year's proposal. They suggested that no direct link could be made between warming temperatures and less habitat.

Panelist Audrey Magoun, a researcher based in Alaska, said shifting weather patterns could mean more snowfall, not less, in the mountains where most wolverines den. She said Monday that she was not taking a position on whether protections were needed and that there was enough time to determine that through additional research before any long-range threats come to pass.

Wolverines were twice denied protections under the Bush administration. In 2010, the Obama administration delayed action and said other imperiled animals and plants had priority over wolverines.