DOMTAR CORPORATION JOHN D. WILLIAMS PRESIDENT & CHIEF EXECUTIVE OFFICER. Jefferies Industrials Conference New York, August 9 th, 2016

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1 JOHN D. WILLIAMS PRESIDENT & CHIEF EXECUTIVE OFFICER DOMTAR CORPORATION Jefferies Industrials Conference New York, August 9 th, 2016 (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. The company is under no obligation, and expressly disclaims such obligation, to update, alter or revise these forward-looking statements, whether as a result of new information, future events or otherwise. 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 risk factors relating to the industries and businesses of Domtar, please refer to Domtar s Annual Report on Form 10-K for the year ended December 31, 2015 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 INVESTMENT GROWTH STRATEGY HIGHLIGHTS JEFFERIES INDUSTRIALS CONFERENCE I August 9th, 2016 Well-defined growth strategy Leading market position Strong financial and liquidity position Committed to creating shareholder value 3

4 DOMTAR OVERVIEW Communication papers Business, commercial print and publishing papers 52% of LTM sales 3-5% LT growth-rate Pulp Manufacturer of papergrade, fluff and specialty pulp 19% of LTM sales 1-2% LT growth-rate Personal care Marketer and producer of a broad line of absorbent hygiene products 17% of LTM sales 2-4% LT growth-rate Specialty papers Leading manufacturer of premium, technical and specialty packaging papers 12% of LTM sales GDP LT growth-rate Leverage cash flows from declining business to invest in growth businesses 4

5 OUR FIBER OF EVERYDAY Processed 17 million green tons of wood fiber 8 million tons per year of biomass processed in boilers and co-generation turbine systems Over 6 million tons of cellulose and 2.5 million tons of lignin Over 500 Megawatt hours of power generation Over 4.4 million tons of pulp Manufactured 3.4 million tons of uncoated freesheet Shipped over 2.3 billion units of adult diapers Shipped over 1.6 billion units of baby diapers 5

6 STRATEGIC PRIORITIES 1 Building on our expertise as fiber innovators to expand into growth businesses 2 Driving value in the Pulp and Paper business 3 Strategically deploying capital towards growth opportunities while continuing track record of returning cash to shareholders 6

7 INVESTING FOR GROWTH Invested Plymouth fluff pulp conversion Acquisition of Attends (US) Acquisition of Attends (Europe) Acquisition of Indas Conversion of Ashdown PM to fluff pulp Investments in paper; divested non-core assets Focus on growth through acquisitions, targeted investments & organic growth; $ million of EBITDA from fiber-based growth businesses Divested Lumber business Hardwood pulp mill CGW mill Acquisition of EAM Acquisition of AHP Forest products company Innovative wood-fiber converting company 7

8 TRANSFORMATION PROGRESS Investing in Sustainable Growth Businesses Entry into Personal Care 5 acquisitions Growing market position in adult incontinence institutional channels Amongst largest private label baby diaper manufacturer in North America Personal Care Expansion Capital investments of $278 million since 2011 Addition of new production lines and building expansion Provides manufacturing flexibility and growth capacity Ashdown Conversion $160 million investment Capacity to produce 516,000 tonnes of fluff pulp Reduces UFS capacity by 364,000 tons Start up Fall 2016 Potential to generate up to $280 million of additional growth EBITDA 8

9 PERSONAL CARE Leading supplier of quality, cost-effective absorbent hygiene solutions Unique combination of proprietary insights, category management and innovation capabilities 8 production & distribution facilities in the United States and Europe 9

10 GROWING PERSONAL CARE The private label market is large, fast-growing and is primarily served by a small number of suppliers Retailers increasingly have higher aspirations for their own brand positioning 85% of our adult incontinence products are distributed through the healthcare channel and is critical to grow and maintain Retail represents a significant growth opportunity for both adult incontinence and baby Source: BMO Capital Markets; IRI; Domtar estimates 10

11 ROADMAP TO $200 MILLION EBITDA TARGET 12% margin 1 Cost Savings 2 Market growth 3 Share of wallet 4 >15% margin New customers Flexible, low cost manufacturing platform In-source savings Procurement savings Underlying market growth o o 1-2% CAGR in baby 4-5% CAGR in adult incontinence Growth from new categories and products at existing customers Opportunity for further store brand market penetration New customer wins Leverage baby position in North America to grow adult incontinence Leverage adult incontinence position in Europe to grow baby 11

12 PULP & PAPER Largest manufacturer of uncoated freesheet in North America Leading global producer of softwood and fluff pulp Low-cost, flexible manufacturing asset base 13 pulp and paper mills 12

13 DRIVING VALUE FROM PULP & PAPER Maintain leading position in North America through product diversity and manufacturing network Reduce costs and adjust manufacturing system according to our customer demand Extract maximum value from our assets to generate cash Leverage our fluff pulp position to grow with key producers of absorbent hygiene products Continue to shift customer base towards hygiene, personal care and strategic P&W markets Build on our sustainability and certification platform 30% 25% Paper: Best Performing Paper Business in North America (Paper EBITDA Margins) Pulp: Limited Softwood Capacity Growth Reduces Volatility (in millions of metric tons) Hardwood 20% 15% Domtar average: 17% 30 Softwood 10% 25 5% 0% -5% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Domtar Paper Peer f 17f 18f 19f Source: PPPC 13

14 INTEGRATED VALUE CHAIN PROVIDES FLEXIBILITY 17M green tons of fiber 4.3M ADMT of pulp capacity Next and highest best use opportunities 13 pulp and paper mills 7 personal care facilities Cellulosic ethanol Advanced composites Alternate paper grades Specialty pulp Polymers Lignin Power generation Creating a bio-refining pillar Steam 3.4M tons of UFS Communication Papers Specialty Papers 1.6M tonnes of market pulp Softwood Fluff Hardwood Ability to transition fiber to next and highest best use opportunities as paper declines 14

15 CASH DEPLOYMENT WILL REMAIN BALANCED 1 2 M&A Focus on fiberbased products in growth markets DIVIDEND Sustainable dividend growth TARGETED CAPEX 3 4 Fiber-based technologies and alternate uses for facilities SHARE BUYBACKS Opportunistic 15

16 CREATING VALUE THROUGH CAPITAL ALLOCATION 12 Month Dividend Yield 4.4% RFP NP GLT WRK KMB PKG PG IP WY Domtar % of Float Repurchased since % RFP NP WRK PG WY PKG IP GLT KMB Domtar Returned $1.3 billion or 75% of free cash flow to shareholders since

17 A FIBER-BASED GROWTH COMPANY STRATEGY THAT IS DELIVERING VALUE JEFFERIES INDUSTRIALS CONFERENCE I August 9th, 2016 o Strong cash engine; growth engines ramping up o Returned $1.3 billion or 75% of FCF to shareholders since 2011 o Six consecutive years of dividend growth o Repurchased nearly $1.0 billion of shares o Repurposed strategic assets o Divested non-performing businesses 17

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