1. H OW, W HEN, AND W HY H IDE P RICES H AVE I NCREASED …and what to expect in the future Don Ohsman www.hidenet.com www.hidenet.com

2. H OW : Supply and Demand Demand increased; supply did not

3. Supply and Demand: Cattle Slaughter

4. Supply and Demand: Cattle Population

5. Supply and Demand: 2013 Cattle Population

6. Between 15% and 45% of cars have leather interiors Leather upholstery, steering wheel, gear shift knob Approximately 50 square feet of leather per vehicle A hide will cut about 65% utilization—a 50 sq. ft. hide will yield 33 sq. ft. About 1.5 hides per vehicle

7. Tanner Sourcing for Automotive Leather United States Charts from Hidenet.com

8. Tanner Sourcing for Automotive Leather Germany/EU Charts from Hidenet.com

9. Tanner Sourcing for Automotive Leather Brazil & Argentina Charts from Hidenet.com

10. W HY AND W HEN : A P ERFECT S TORM Confluence of events led to record high markets

11. Auto production still increasing for N. America and China

12. Vehicle sales exploded in China, surpassing US market

13. Rapid Chinese economic growth means more disposable income

14. Leather seating, trim, steering wheels most fashionable Even in tough economy, leather seating helps maintain resale value Leather seating is a popular option for those who lease cars (about 20% of American consumers) US climbing out of recession

15. Leather Usage Breakdown

16. Tanners for automobile leather have adapted and adjusted Utilization of previously inferior hides Collagen and splitting

17. US Outstanding Sales Chart from Hidenet.com

18. Markets don’t move in a straight line Raw materials in US peaking W HAT N EXT ?

20. How long can car sales keep this pace? How long can leather remain in fashion for autos? Where will the Chinese economy go? The rest of the world? A ND FOR THE FUTURE ?

21. H OW DO THE B IGGEST P LAYERS IN THE G LOBAL L EATHER & H IDE MARKETS STAY AHEAD OF THEIR COMPETITION ? WWW. HIDENET. COM WWW. HIDENET. COM