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

• Fourth quarter 2012 net earnings of $0.54 per share, earnings before items1 of $1.31 per share

• Closed the sale of the Ottawa/Gatineau hydro assets for CDN$46 million

• Free cash flow1 payout of 68% in 2012 through regular dividends and share buybacks

Domtar Corporation reported net earnings of $19 million ($0.54 per share) for the fourth quarter of 2012 compared to net earnings of $66 million ($1.84 per share) for the third quarter of 2012 and net earnings of $61 million ($1.63 per share) for the fourth quarter of 2011. Sales for the fourth quarter of 2012 amounted to $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $46 million ($1.31 per share) for the fourth quarter of 2012 compared to earnings before items1 of $67 million ($1.87 per share) for the third quarter of 2012 and earnings before items1 of $93 million ($2.49 per share) for the fourth quarter of 2011.

Fourth quarter 2012 items:

• Closure and restructuring costs of $27 million ($18 million after tax);

• Charge of $12 million ($8 million after tax) related to the impairment and write-down of property, plant and equipment and intangible assets; and

• Net losses on the sale of property, plant and equipment of $2 million ($1 million after tax).

Third quarter 2012 items:

• Closure and restructuring costs of $2 million ($1 million after tax).

Fourth quarter 2011 items:

• Closure and restructuring costs of $38 million ($23 million after tax); and

• Charge of $12 million ($9 million after tax) related to the impairment and write-down of property, plant and equipment.

"Our paper and pulp businesses performed largely in-line with expectations from a sales standpoint in the fourth quarter," said John D. Williams, President and Chief Executive Officer. "Higher costs for fiber and energy and unexpected costs incurred at a pulp mill following a planned maintenance outage affected results."

FISCAL YEAR 2012 HIGHLIGHTS

For fiscal year 2012, net earnings amounted to $172 million ($4.76 per share) compared to net earnings of $365 million ($9.08 per share) for fiscal year 2011. The Company had earnings before items1 of $233 million ($6.45 per share) for fiscal 2012 compared to earnings before items1 of $452 million ($11.24 per share) for fiscal 2011. Sales amounted to $5.5 billion for fiscal year 2012.

Commenting on the year, Mr. Williams said, "The down cycle in pulp prices contributed to the majority of the decline in Domtar's earnings. We accomplished a great deal again in 2012 nevertheless. We completed two acquisitions in our Personal Care business, we announced the conversion of a world-class commodity paper mill to manufacture specialty papers and launched several innovative projects that provide alternative uses for our wood fiber and the by-products of our manufacturing process. Our journey to build a growing fiber-based business is well underway," added Mr. Williams.

QUARTERLY REVIEW

Operating income before items1 was $84 million in the fourth quarter of 2012 compared to an operating income before items1 of $111 million in the third quarter of 2012. Depreciation and amortization totaled $96 million in the fourth quarter of 2012.

(In millions of dollars)                       4Q 2012                      3Q 2012

Sales                                            $1,327                         $1,389