DOMTAR CORPORATION REPORTS PRELIMINARY FIRST QUARTER 2011 FINANCIAL RESULTS

Strong paper shipments and productivity gains across the mill system drive solid results
(All financial information is in U.S. dollars, and all earnings (loss) per share results are diluted, unless otherwise noted.)

• First quarter net earnings of $3.14 per share, earnings before items¹ of $3.25 per share
• EBITDA before items¹ of $311 million
• Paper shipments increase 7.4% compared to fourth quarter 2010

TICKER SYMBOL
(NYSE : UFS) (TSX: UFS)

MONTREAL, April 28 /PRNewswire-FirstCall/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $133 million ($3.14 per share) for the first quarter of 2011 compared to net earnings of $325 million ($7.59 per share) for the fourth quarter of 2010 and net earnings of $58 million ($1.34 per share) for the first quarter of 2010. Sales for the first quarter of 2011 amounted to $1.4 billion. Excluding items listed below, the Company had earnings before items¹ of $138 million ($3.25 per share) for the first quarter of 2011 compared to earnings before items¹ of $103 million ($2.41 per share) for the fourth quarter of 2010 and earnings before items¹ of $69 million ($1.59 per share) for the first quarter of 2010.

First quarter 2011 items:

• Closure and restructuring costs of $11 million ($8 million after tax);
• Gain on the sale of property, plant and equipment and business of $7 million ($5 million after tax); and
• Charge of $3 million ($2 million after tax) related to the impairment and write-down of property, plant and equipment.

Fourth quarter 2010 items:

• Benefit from cellulosic biofuel producer income tax credit of $127 million;
• Benefit from reversal of a valuation allowance on Canadian deferred income tax assets of $100 million;
• Costs for debt repurchase of $7 million ($4 million after tax); and
• Closure and restructuring costs of $1 million ($1 million after tax).

First quarter 2010 items:

• Refundable excise tax credit for the production and use of alternative bio fuel mixtures of $25 million ($18 million after tax);
• Charge of $22 million ($16 million after tax) related to the impairment and write-down of property, plant and equipment;
• Closure and restructuring costs of $20 million ($14 million after tax); and
• Gain on sale of property, plant and equipment of $1 million ($1 million after tax).

"Our operations ran well in the first quarter and we were able to overcome the production related issues that affected our fourth quarter 2010 financial results. We experienced strong paper shipments and continued momentum in pulp markets while keeping our costs under control. The implementation of the recently announced price increases in pulp and for numerous paper grades will help offset the inflation in input costs stemming from rising global materials prices," said John D. Williams, President and Chief Executive Officer. Commenting on capital allocation, Mr. Williams said, "We also resumed our stock repurchase activity in the first quarter and in doing so, we have returned $80 million to shareholders through the combination of stock buyback and regular dividend. Stock repurchases continue to be our preferred method to returning capital to shareholders."

QUARTERLY REVIEW

Operating income before items¹ was $218 million in the first quarter of 2011 compared to an operating income before items¹ of $156 million in the fourth quarter of 2010. Depreciation and amortization totaled $93 million in the first quarter of 2011. When compared to the fourth quarter of 2010, paper shipments increased 7% while pulp shipments remained stable. The shipments-to-production ratio for paper was 102% in the first quarter of 2011, compared to 97% in the fourth quarter of 2010. Paper inventories declined by 13,000 tons while pulp inventories increased by 3,000 metric tons as at the end of March, compared to year-end levels. Paper deliveries of Ariva^TM, Domtar's paper merchants business, increased 1% when compared to the fourth quarter of 2010.

The increase in operating income before items¹ in the first quarter of 2011 was the result of higher paper shipments, higher average selling prices in pulp and lower maintenance costs. These factors were partially offset by higher unit costs for chemicals, lower average selling prices in paper and the negative impact of a strong Canadian dollar including hedging.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $148 million and capital expenditures amounted to $13 million, resulting in free cash flow¹ of $135 million in the first quarter of 2011. Domtar's net debt-to-total capitalization ratio¹ stood at 7% at March 31, 2011 compared to 9% at December 31, 2010.

Under its stock repurchase program, Domtar repurchased 789,957 shares of common stock at an average price of $87.79 during the first quarter of 2011. Since the implementation of the program, the Company has repurchased a total of 1,528,004 shares of common stock at an average price of $74.35.

OUTLOOK

Paper shipments are expected to decline moderately throughout 2011. The announced closure of a paper machine at our Ashdown, Arkansas mill will help balance our production to our customer demand. Rising commodity and energy prices are expected to put pressure on some of our input costs in 2011 however we are expected to benefit from our recently announced price increases for softwood pulp and for commercial printing and converting papers. We will continue to manage our business conservatively, looking to grow profitably and to create sustainable long-term shareholder value.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its first quarter 2011 financial results. Financial analysts are invited to participate in the call by dialing at least 10 minutes before start time 1 (866) 321-8231 (toll free - North America) or 1 (416) 642-5213 (International), while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com.

The Company will release its second quarter 2011 earnings on July 28, 2011 before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

About Domtar

Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade, fluff and specialty pulp. The Company designs, manufactures, markets and distributes a wide range of business, commercial printing and publishing as well as converting and specialty papers including recognized brands such as Cougar^®, Lynx^® Opaque Ultra, Husky^® Opaque Offset, First Choice^® and Domtar EarthChoice^® Office Paper, part of a family of environmentally and socially responsible papers. Domtar owns and operates Ariva^TM, an extensive network of strategically located paper distribution facilities. The Company employs approximately 8,500 people. To learn more, visit www.domtar.com.

Forward-Looking Statements

All statements in this news release that are not based on historical fact are "forward-looking statements." While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. 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 such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the captions "Forward-Looking Statements" and "Risk Factors" of the latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Q's. Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances.

_____________________________________

¹  Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP") financial metrics identified in bold as "Earnings before items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin", "EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net debt" and "Net debt-to-total capitalization." Management believes that the financial metrics presented are frequently used by investors and are useful to evaluate our ability to service debt and our overall credit profile. Management believes these metrics are also useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates "Earnings before items" and "EBITDA before items" by excluding the after-tax (pre-tax) effect of items considered by management as not reflecting our current operations. Management uses these measures, as well as EBITDA and Free cash flow, to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Net earnings provides for a more complete analysis of the results of operations. Net earnings and Cash flow provided from operating activities are the most directly comparable GAAP measures.

"Earnings before items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin", "EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net debt" and "Net debt-to-total capitalization" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Net earnings, Operating income or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2011
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

"Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2010
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

"Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

⁽¹⁾ As previously reported, we sold 88% of the Wood segment on June 30, 2010 to EACOM Timber Corporation ("EACOM"). During the fourth quarter of 2010, in an unrelated transaction, we sold the remaining 12% of common stock held in EACOM.

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)

Note: the term "ST" refers to a short ton, the term "ADMT" refers to an air dry metric ton, and the term "FBM" refers to foot board measure.

SOURCE DOMTAR CORPORATION

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