Citi Conference - Novemeber 28, 2018vWEBCAST final

Citi Basic Materials Conference I November 28, 2018

(All financial information in U.S. dollars, unless otherwise noted)

Citi Basic Materials ConferenceNew York, November 28, 2018

JOHN D. WILLIAMSPRESIDENT & CHIEF EXECUTIVE OFFICER

DOMTAR CORPORATION


SAFE HARBOR

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.

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 http://www.domtar.com.

Forward-Looking Statements

Non-GAAP Financial Measures

2


ABOUT US

3

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.

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


WHO WE ARE

4

Well-defined strategy

Committed to creating

shareholder value

Strong financial

and liquidity position

Leading market position

INVESTMENT HIGHLIGHTS

$5.4 billionLTM Sales

$3.8 billionEnterprise Value

10,000Employees Worldwide

$2.7 billionMarket Capitalization


STRATEGIC PRIORITIES

5

11 22 33Drive value in Pulp and Paper business

Expand into growth businesses

Deploy capital towards growth while returning cash to shareholders� Operate an optimal portfolio of

strategic assets

� Increase productivity in our pulp business

� Pursue new sources of paper consumption

� 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

� 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

As a leading fiber-based technology company, we are focused on driving innovation, enhancing our operating platforms, and delivering high quality products


DOMTAR OVERVIEW

6

Communication Papers

Business, commercial print and publishing papers

3-5%3-5%46%of 2017 sales

LT growth-rate

Personal Care

Marketer and producer of a broad line of absorbent hygiene

products

2-4%2-4%19%of 2017 sales

LT growth-rate

Market Pulp Manufacturer of papergrade,

fluff and specialty pulp1-2%1-2%22%

of 2017 sales

LT growth-rate

Specialty Papers

Leading manufacturer of premium, technical and specialty packaging

papers

GDPGDP13%of 2017 sales

LT growth-rate

Three of our four businesses in growth markets


BUSINESS EVOLUTION

7

Focus on growth through targeted investments, organic and through acquisitions Focus on growth through targeted investments, organic and through acquisitions

Customers, costs and cash, execution in pulp and paper and divest non-core assetsCustomers, costs and cash, execution in pulp and paper and divest non-core assets

Repurpose assets, harvest and innovate Repurpose assets, harvest and innovate

� 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

� Invested in major asset repurposing projects at Plymouth, Marlboro and Ashdown

� Built a $1B global hygiene business

� Leverage repurposing roadmap

� Harvest investments in pulp

� Innovate and execute in Biomaterals


WHERE WE ARE TODAY

8

NET DEBT-TO-CAP 25%

FREE CASH FLOW YIELD*

10.1%

PAPER MARGIN EXPANSION +300 basis points vs. Q2-18

OPERATING CASH FLOW$460 million in LTM

HIGHER PAPER VOLUMES up 4% YTD

HIGHER PAPER PRICES up $73 per ton vs. Q3-17

HIGHER PULP PRICES up $141 per ADMTvs. Q3-17

*As of Q3-18


MARKET LEADING POSITION IN PAPER

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North American Uncoated Freesheet Capacity

33%

20%Other

7%

8%

10%

22%

Operating footprint

T&SCommunication PapersPulp

Espanola Windsor

Port HuronJohnsonburg

Ashdown

NekoosaRothschild

Hawesville

Marlboro

Kingsport

� 20 paper machines� 10 paper mills� 13 converting facilities� 38 distribution centers

Selected highlights

Sales breakdown, 2017

81%

13%

6%CanadaRoW

US

83%

17%

Technical & Specialty Papers

Communication Papers

Sales by region Sales by product categories

Market share (%)


10

RELIABLE AND HIGHLY CASH-GENERATING BUSINESS

Uncoated freesheet has declined, on average, 3.8% per year since 2000; however, the rate of decline has slowed over the last few years

Domtar has maintained its market share position throughout the years; top 4 players now represent 73% of all North American uncoated freesheet capacity

Domtar owns and operates some of the best and largest uncoated freesheet mills

Prices have been relatively stable since 2009; the business is expected to continue to generate a significant amount of cash

Favorable supply and demand market dynamics expected to continue over next 12-18 months

Uncoated freesheet demand is improving

Uncoated freesheet markets at inflection

point

World-class assets

Largest uncoated freesheet producer in North America

Pricing


THE PULP GROWTH BUSINESS

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41%

33%

26%China

RoW

US

56%41%

3%

Hardwood

Softwood

Kamloops

EspanolaDryden

PlymouthAshdown

NBSK

Fluff

SBSK

Operating footprint

T&SCommunication PapersPulp

� 5 large-scale market pulp mills

� Market pulp also produced in at least 3 other locations

� 8 different grades or products

Selected highlights



Global Market Softwood Pulp Capacity

1.8

Capacity in millions of ADMT

Fluff


PULP POSITIONED IN ATTRACTIVE MARKETS, WITH STRONG OUTLOOK

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Fluff

� 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 2014-2017 and 15% of total consumption

Softwood

� 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

3%

56%

41%

Softwood

Fluff

Other Source: PPPC

Source: Domtar analysis, RISI


MAXIMIZING THE VALUE OF OUR PULP BUSINESS

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� 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 1st quartile cash costs

� Debottleneck, energy efficiency and several upgrades to be considered at four market pulp mills

� Projects with returns in excess of 25%


GROWING PERSONAL CARE

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48%

48%

2%2%

Europe

RoW

US

61%29%

10%

InfantAdult

Incontinence


OtherCanada

Operating footprint

Waco

Jesup

Greenville

DelawareSt-Louis

Toledo

Aneby

� 62 converting machines in 5 plants

� 1,900 employees

Selected highlights

Key components of our competitive advantage

Turn-key solutions to help improve our customers’ positions vs their competition

Focused R&D and innovation capabilities delivering

meaningfully distinctive products

Provide our customers with superior insight into the needs of specific consumers

Proprietary and flexible manufacturing platform to make

unique product solutions


FAVORABLE MARKET TRENDS

Growing middle-class with higher disposable income

Growing demand for high-quality, absorbent hygiene products

Global population growth

Aging population

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PERSONAL CARE: PATH TO PROFITABLE GROWTH

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20182018 20192019 20202020

Customer rationalizationCustomer rationalization

Waco, TX closureWaco, TX closure

Equipment relocationEquipment relocation

Productivity and supply chain efficiencies Productivity and supply chain efficiencies

Headcount reductionHeadcount reduction

Price initiativesPrice initiatives

SKU rationalizationSKU rationalization

Targeting $25-30 million of EBITDA improvementActions will reduce our cost base and strengthen our long-term competitive position


CASH DEPLOYMENT WILL REMAIN BALANCED

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Highlights Key priorities

$1.6B

Cash flow returned to shareholders since 2011

Float repurchased since 2010

34%

11

TARGETED CAPITAL INVESTMENTS in fiber- based technologies and alternate uses for our facilities

22DIVIDEND - current cash payout of $110 million per year

33 MERGERS & ACQUISITIONS with a focus on fiber-based products in growth markets

44 Opportunistic SHARE BUYBACKSDividend yield*

3.7% *As of Q3-18


CURRENT MOMENTUM DRIVERS

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MARKETS

� Strong demand across pulp and paper business

� High operating rates

� Announced industry paper capacity closures and conversions

� Favorable import dynamics

CATALYSTS� Asset optionality

� Personal Care margin improvement plan

EARNINGS RUNWAY

� Flow-through of paper and pulp price increases

� Strong paper and pulp shipments

� Continuous improvement program

CASH GENERATION

� Strong and sustainable free cash flow


PATH TO GROWTH: ASSET REPURPOSING

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� Feasibility study highlighted the significant potential embedded in our paper manufacturing assets

o4 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


ASSET ROADMAP PROVIDES VALUE-CREATING OPTIONALITY

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ASHDOWN, ARUncoated freesheet capacity: 265,000 tons

KINGSPORT, TNUncoated freesheet capacity: 426,000 tons

MARLBORO, SCUncoated freesheet capacity: 274,000 tons

HAWESVILLE, KYUncoated freesheet capacity: 596,000 tons

~ 400,000 tons of kraftliner board

~ 75,000 ADMT of fluff pulp11

~ 255,000 ADMT of fluff & SBSK pulp

~ 600,000 tons of recycled linerboard


~ 315,000 ADMT of fluff pulp


~ 320,000 tons of recycled medium

Option

Converted facilities will be competitive and well located to serve domestic and export markets

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Option

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Option

11

Option

22

Option

11

Option


GROWTH STRATEGY

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A FIBER-BASED COMPANY THAT IS

DELIVERING VALUE

o Strong cash engine with favorable market dynamics

o Growth strategy capable of generating attractive long-term returns

o 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

Citi Conference - Novemeber 28, 2018vWEBCAST final

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