DOMTAR CORPORATION JOHN D. WILLIAMS PRESIDENT & CHIEF EXECUTIVE OFFICER. Citi Basic Materials Conference New York, November 28, 2018

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1 JOHN D. WILLIAMS PRESIDENT & CHIEF EXECUTIVE OFFICER DOMTAR CORPORATION Citi Basic Materials Conference New York, November 28, 2018 (All financial information in U.S. dollars, unless otherwise noted)

2 SAFE HARBOR Forward-Looking Statements All statements in this presentation that are not based on historical facts are forward-looking statements, including statements relating to repurposing of mills, the impact of price increases, sales levels, margins, and the impact of our Personal Care initiatives. The company expressly disclaims any obligation to update, alter or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside of our control that could cause actual results to materially differ from those projected in the forward-looking statements. For a summary of the risks that could cause actual results to defer materially, please refer to Domtar s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission and as updated by subsequently-filed Form 10-Q s. Non-GAAP Financial Measures This presentation refers to non-u.s. GAAP financial information. For a reconciliation to U.S. GAAP financial measures, please refer to the schedules attached hereto as Appendix A and the investors section of the company s website at 2

3 ABOUT US Domtar is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products Domtar is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products. 3

4 WHO WE ARE $5.4 billion LTM Sales $3.8 billion Enterprise Value 10,000 Employees Worldwide $2.7 billion Market Capitalization INVESTMENT HIGHLIGHTS Well-defined strategy Leading market position Strong financial and liquidity position Committed to creating shareholder value 4

5 STRATEGIC PRIORITIES As a leading fiber-based technology company, we are focused on driving innovation, enhancing our operating platforms, and delivering high quality products Drive value in Pulp and Paper business Operate an optimal portfolio of strategic assets Increase productivity in our pulp business Pursue new sources of paper consumption Expand into growth businesses Optimize and expand our operations in markets with positive demand dynamics Repurpose of assets, investments for organic growth and strategic acquisitions Capitalize on new opportunities in the wood fiber market Deploy capital towards growth while returning cash to shareholders A balanced and disciplined approach to capital allocation Committed to deploying capital only to the areas that will achieve the best possible return for our stockholders 5

6 DOMTAR OVERVIEW Three of our four businesses in growth markets Communication Papers Business, commercial print and publishing papers 46% of 2017 sales 3-5% LT growth-rate Market Pulp Manufacturer of papergrade, fluff and specialty pulp 22% of 2017 sales 1-2% LT growth-rate Personal Care Marketer and producer of a broad line of absorbent hygiene products 19% of 2017 sales 2-4% LT growth-rate Specialty Papers Leading manufacturer of premium, technical and specialty packaging papers 13% of 2017 sales GDP LT growth-rate 6

7 BUSINESS EVOLUTION Customers, costs and cash, execution in pulp and paper and divest non-core assets Maintained leadership position and market share despite secular demand declines Divested underperforming businesses including lumber, hardwood pulp, coated groundwood and US paper distribution Generated over $6 billion of operating cash flow since 2009 Focus on growth through targeted investments, organic and through acquisitions Invested in major asset repurposing projects at Plymouth, Marlboro and Ashdown Built a $1B global hygiene business Repurpose assets, harvest and innovate Leverage repurposing roadmap Harvest investments in pulp Innovate and execute in Biomaterals 7

8 WHERE WE ARE TODAY HIGHER PAPER PRICES up $73 per ton vs. Q3-17 PAPER MARGIN EXPANSION +300 basis points vs. Q2-18 HIGHER PAPER VOLUMES up 4% YTD OPERATING CASH FLOW $460 million in LTM HIGHER PULP PRICES up $141 per ADMT vs. Q3-17 FREE CASH FLOW YIELD * 10.1% NET DEBT-TO- CAP 25% *As of Q3-18 8

9 MARKET LEADING POSITION IN PAPER Operating footprint Pulp Communication Papers T&S North American Uncoated Freesheet Capacity Market share (%) 33% Selected highlights 20 paper machines 10 paper mills 13 converting facilities 38 distribution centers Ashdown Rothschild Nekoosa Port Huron Hawesville Espanola Kingsport Marlboro Windsor Johnsonburg 8% 10% 22% Sales breakdown, 2017 Sales by region Sales by product categories 7% Canada 13% RoW 6% Technical & Specialty Papers 17% Other 20% 81% US 83% Communication Papers 9

10 RELIABLE AND HIGHLY CASH-GENERATING BUSINESS Uncoated freesheet demand is improving Uncoated freesheet has declined, on average, 3.8% per year since 2000; however, the rate of decline has slowed over the last few years Uncoated freesheet markets at inflection point Favorable supply and demand market dynamics expected to continue over next months World-class assets Domtar owns and operates some of the best and largest uncoated freesheet mills Largest uncoated freesheet producer in North America Domtar has maintained its market share position throughout the years; top 4 players now represent 73% of all North American uncoated freesheet capacity Pricing Prices have been relatively stable since 2009; the business is expected to continue to generate a significant amount of cash 10

11 THE PULP GROWTH BUSINESS Operating footprint Pulp Communication Papers T&S Kamloops Global Market Softwood Pulp Capacity Capacity in millions of ADMT Selected highlights Dryden Espanola 5 large-scale market pulp mills Market pulp also produced in at least 3 other locations 8 different grades or products Ashdown Plymouth 1.8 Fluff SBSK Sales breakdown, 2017 NBSK Sales by region Sales by product categories Hardwood China 26% 41% US 3% 41% 56% RoW 33% Fluff Softwood 11

12 PULP POSITIONED IN ATTRACTIVE MARKETS, WITH STRONG OUTLOOK Softwood Other Softwood 3% 56% Forecasted growth of 1.5% per year through 2022 No new major market softwood pulp projects announced 1.9 million ADMT of additional bleached softwood global demand expected by 2022 Over 75% of demand growth expected from China 150 new tissue machines expected between 2017 and 2020 Source: PPPC Fluff Fluff 41% Forecasted growth of 3.8% per year through 2022 No new major market fluff pulp projects announced Only 3 suppliers, with combined capacity share of 78%, with more than one mill US accounted for more than 87% of global supply China represented 36% of the global growth between and 15% of total consumption Source: Domtar analysis, RISI 12

13 MAXIMIZING THE VALUE OF OUR PULP BUSINESS Domtar s pulp business well positioned in attractive markets with a positive outlook for the next 2-3 years Opportunity to capitalize on growth opportunities, productivity and cost improvements Modernize, integrate and optimize platforms in order to drive market pulp mills towards 1 st quartile cash costs Debottleneck, energy efficiency and several upgrades to be considered at four market pulp mills Projects with returns in excess of 25% 13

14 GROWING PERSONAL CARE Selected highlights 62 converting machines in 5 plants 1,900 employees Operating footprint Aneby Key components of our competitive advantage St-Louis Delaware Turn-key solutions to help improve our customers positions vs their competition Focused R&D and innovation capabilities delivering meaningfully distinctive products Greenville Toledo Jesup Waco Sales breakdown, 2017 Sales by region RoW Canada 2%2% Sales by product categories Other 10% Provide our customers with superior insight into the needs of specific consumers Proprietary and flexible manufacturing platform to make unique product solutions Europe 48% 48% US Infant 29% 61% Adult Incontinence 14

15 FAVORABLE MARKET TRENDS Growing middle-class with higher disposable income Aging population Growing demand for high-quality, absorbent hygiene products Global population growth 15

16 PERSONAL CARE: PATH TO PROFITABLE GROWTH Targeting $25-30 million of EBITDA improvement Actions will reduce our cost base and strengthen our long-term competitive position Headcount reduction Price initiatives SKU rationalization Customer rationalization Productivity and supply chain efficiencies Waco, TX closure Equipment relocation 16

17 CASH DEPLOYMENT WILL REMAIN BALANCED Highlights Key priorities Cash flow returned to shareholders since 2011 $1.6B 1 TARGETED CAPITAL INVESTMENTS in fiber- based technologies and alternate uses for our facilities Float repurchased since % Dividend yield * 3.7% 2 DIVIDEND - current cash payout of $110 million per year 3 MERGERS & ACQUISITIONS with a focus on fiber-based products in growth markets 4 Opportunistic SHARE BUYBACKS *As of Q

18 CURRENT MOMENTUM DRIVERS MARKETS EARNINGS RUNWAY Strong demand across pulp and paper business High operating rates Announced industry paper capacity closures and conversions Favorable import dynamics Flow-through of paper and pulp price increases Strong paper and pulp shipments Continuous improvement program CATALYSTS Asset optionality Personal Care margin improvement plan CASH GENERATION Strong and sustainable free cash flow 18

19 PATH TO GROWTH: ASSET REPURPOSING Feasibility study highlighted the significant potential embedded in our paper manufacturing assets o 4 large scale paper machine/mill repurposing projects Opportunity to build additional growth segment, while also expanding in an existing growth business opotential of 2.5 million tons of containerboard and/or 570,000 ADMT of market softwood and fluff pulp The timing of the conversions will be decided based on market and economic conditions as well as the supply requirements of paper customers omaximize the life of paper earnings and repurpose only when there are compelling business drivers otiming will be determined by profitability 19

20 ASSET ROADMAP PROVIDES VALUE-CREATING OPTIONALITY Converted facilities will be competitive and well located to serve domestic and export markets ASHDOWN, AR Uncoated freesheet capacity: 265,000 tons Option 1 Option 2 ~ 400,000 tons of kraftliner board ~ 75,000 ADMT of fluff pulp ~ 255,000 ADMT of fluff & SBSK pulp HAWESVILLE, KY Uncoated freesheet capacity: 596,000 tons Option 1 ~ 580,000 tons of kraftliner board ~ 320,000 tons of recycled medium KINGSPORT, TN Uncoated freesheet capacity: 426,000 tons Option 1 ~ 600,000 tons of recycled linerboard MARLBORO, SC Uncoated freesheet capacity: 274,000 tons Option 1 Option 2 ~ 600,000 tons of kraftliner board ~ 315,000 ADMT of fluff pulp 20

21 A FIBER-BASED GROWTH COMPANY STRATEGY THAT IS DELIVERING VALUE Citi Basic Materials Conference I November 28, 2018 o o o Strong cash engine with favorable market dynamics Growth strategy capable of generating attractive long-term returns A clear and actionable asset repurposing roadmap that positions our assets for its most profitable, next use o Returned $1.6 billion or 66% of FCF to shareholders since 2011 o Divested non-performing businesses 21

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