Earnings affected by higher planned maintenance and related costs

(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

• First quarter 2016 net earnings of $0.06 per share; earnings before items1 of $0.35 per share
• Closed paper machine at Ashdown mill, reducing annual paper capacity by 364,000 tons
• Price increases announced for softwood pulp and several uncoated freesheet grades

FORT MILL, S.C. - Domtar Corporation today reported net earnings of $4 million ($0.06 per share) for the first quarter of 2016 compared to net earnings of $57 million ($0.91 per share) for the fourth quarter of 2015 and net earnings of $36 million ($0.56 per share) for the first quarter of 2015. Sales for the first quarter of 2016 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $22 million ($0.35 per share) for the first quarter of 2016 compared to earnings before items1 of $70 million ($1.11 per share) for the fourth quarter of 2015 and earnings before items1 of $48 million ($0.75 per share) for the first quarter of 2015.

First quarter 2016 items:

• Closure and restructuring costs of $2 million ($2 million after tax); and
• Impairment of property, plant & equipment of $21 million ($16 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).

First quarter 2015 items:

• Closure and restructuring costs of $1 million ($1 million after tax);
• Gain on disposal of property, plant and equipment of $1 million ($1 million after tax); and
• Impairment of property, plant & equipment of $19 million ($12 million after tax).

“Although our teams were very agile and executed well on things under our control, our results in pulp and paper were negatively impacted by unexpected costs during the extended maintenance outages,” said John D. Williams, President and Chief Executive Officer. “Given the timing of maintenance activity and costs related to the fluff pulp conversion, our first half results are expected to remain subdued before significantly improving in the second half as the benefits from the Ashdown conversion, lower maintenance and higher prices accrue.”

Mr. Williams added, “We delivered strong year over year EBITDA growth in Personal Care with procurement initiatives and manufacturing cost savings driving the majority of the increase. During the quarter, we began delivering on our new sales growth wins including the successful launch of a partner brand and the ramping up of volume for a major account. We are on track to realize the top-line benefits of the new customer wins through 2016.”

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