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Domtar 2016 Annual Report

As fiber innovators, we are also accelerating our research and development program in biomaterials, including advanced fibers, extractives, lignin, biofuels and wood-based cellulose derivatives. These are longer-term opportunities and we are casting a wide net to attract potential commercial partners. TRANSITION TO GROWTH Domtar is now a supplier of choice in three markets with growing demand—personal care, pulp and specialty papers. We aim to grow our scale and profitability in these markets, and in adjacent markets, while maintaining our leadership in communication papers. Our objective is to generate $300 to $500 million in EBITDA from growing businesses; we currently have the capacity to reach close to the half-way point of our target with our new fluff line at Ashdown and our growing personal care business. A solid balance sheet and our proven ability to sustain strong cash generation provide the means to fund continued growth while returning cash to shareholders. We will continue to pursue this balanced approach to capital deployment in the years ahead. ACKNOWLEDGEMENTS The performance of our people was exemplary in 2016. Our employees are working smart every day and living our values of agility, caring and innovation. They are making Domtar a stronger company, and I thank them sincerely for their dedication. Protecting their safety and wellness is a top priority, backed by rigorous programs. Health and safety performance was positive across Domtar in 2016, and we remain committed to continuous improvement. OUR EMPLOYEES ARE WORKING SMART EVERY DAY AND LIVING OUR VALUES OF AGILITY, CARING AND INNOVATION. I also wish to reiterate our deep attachment to the communities we call home. In 2016, Domtar employees doubled the number of volunteer hours invested in company-sponsored community programs in support of literacy, health and wellness, and sustainability— a striking example of caring. Finally, I wish to thank our shareholders for supporting our journey to sustainable growth. John D. Williams President and Chief Executive Officer The term “EBITDA” referred to in this message is a non-GAAP financial measure. Please see “Reconciliation of non-GAAP financial measures” at the end of this document. DOMTAR 2016 ANNUAL REPORT 7


Domtar 2016 Annual Report
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