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FORT MILL, S.C.----Feb. 9, 2017-- Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $47 million ($0.75 per share) for the fourth quarter of 2016 compared to net earnings of $59 million ($0.94 per share) for the third quarter of 2016 and net earnings of $57 million ($0.91 per share) for the fourth quarter of 2015. Sales for the fourth quarter of 2016 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $47 million ($0.75 per share) for the fourth quarter of 2016 compared to earnings before items1 of $71 million ($1.13 per share) for the third quarter of 2016 and earnings before items1 of $70 million ($1.11 per share) for the fourth quarter of 2015.

Fourth quarter 2016 items:

Closure and restructuring impact of $(1) million ($(1) million after tax); and
Negative impact of purchase accounting of $1 million ($1 million after tax).

Third quarter 2016 items:

Closure and restructuring costs of $10 million ($8 million after tax); and
Impairment of property, plant & equipment of $5 million ($4 million after tax).

Fourth quarter 2015 items:

Closure and restructuring costs of $1 million ($1 million after tax); and
Impairment of property, plant & equipment of $20 million ($12 million after tax).

FISCAL YEAR 2016 HIGHLIGHTS

For fiscal year 2016, net earnings amounted to $128 million ($2.04 per share) compared to net earnings of $142 million ($2.24 per share) for fiscal year 2015. The Company had earnings before items1 of $178 million ($2.84 per share) for fiscal year 2016 compared to earnings before items1 of $211 million ($3.33 per share) for fiscal year 2015. Sales amounted to $5.1 billion for fiscal year 2016.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer, said, "Our businesses generated strong EBITDA and cash flow in a challenging macro-economic and competitive environment. This allowed us to further execute on our growth strategy, while returning cash to our shareholders."

QUARTERLY REVIEW

"Our pulp business shipped record volumes of softwood in the fourth quarter. Nevertheless, the segment was impacted by lower prices and higher costs," said John D. Williams, President and Chief Executive Officer. "Personal Care began manufacturing baby diapers using Ashdown fluff pulp with initial trials providing good results. This production is the first step towards qualifying Ashdown fluff pulp for the hygiene market."

Mr. Williams added, "The fourth quarter marked our highest Personal Care sales and EBITDA of the year, which included the results of our recent HDIS acquisition. We are scaling up our capabilities in the rapidly growing direct-to-consumer channel, while expanding our partner-brand strategy to capture sales growth and higher margins by continuing to differentiate the way we sell our products."

Operating income was $74 million in the fourth quarter of 2016 compared to an operating income of $92 million in the third quarter of 2016. Depreciation and amortization totaled $85 million in the fourth quarter of 2016.

Operating income before items1 was $74 million in the fourth quarter of 2016 compared to an operating income before items1 of $107 million in the third quarter of 2016.

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