Hankook Tire Manufacturing Co., the world's seventh-biggest tiremaker by sales, on Friday posted a 13-percent on-year drop in its first-quarter net profit due to high manufacturing costs.

Net profit for the three months that ended on March 31 fell to 171.15 billion won ($151 million) from 196.66 billion won a year earlier, the company said in a statement. 

"A rise in the cost of raw materials used to make tires in the first quarter affected earnings," a company spokesman said.

The company added that as overseas markets account for 83 percent of Hankook's total sales, unfavorable exchange rates affected the earnings repatriated when calculated in terms of the Korean won.

Operating profit also declined 8 percent to 230.95 billion won in the first quarter from 251.14 billion won a year earlier. Sales inched up 0.8 percent to 1.64 trillion won from 1.63 trillion won during the same period, the statement said.

Last year, Hankook Tire sold a total of 99 million tires produced at its nine plants -- two in South Korea, three in China, one in Hungary, one in Indonesia and one in the United States.

To enhance its brand image in global markets, the second-tier tiremaker has provided original equipment tires to 45 foreign carmakers such as Audi, BMW, Mercedes-Benz and Porshe.

Supplying OE tires to car manufacturers does not make much money for tiremakers but securing luxury carmakers as clients help improve their brand image and raise product prices in the long term.

For tiremakers, it is more profitable to sell replacement equipment tires in the after-sale markets.

Hankook Tire earns 30 percent of its total sales from OE tire sales, with the remaining 70 percent coming from RE tires sales, a company spokesman said. (Yonhap)