Domtar Corporation reports third quarter 2007 results



    TICKER SYMBOL
    UFS (NYSE, TSX)

    MONTREAL, Nov. 7 /CNW Telbec/ - Domtar Corporation (NYSE/TSX: UFS) today
reported net income of $36 million ($0.07 per diluted share) for the third
quarter of 2007 compared to net income of $11 million ($0.02 per diluted
share) in the second quarter of 2007. Sales for the third quarter of 2007
increased 4.9% from the second quarter to $1.7 billion.
    The stronger results when compared to the second quarter of 2007 were
primarily due to higher selling prices, lower costs related to planned
maintenance shutdowns and to freight, as well as higher shipments, which in
total improved net income by $0.07 per diluted share. This increase was
partially offset by the negative impact of a stronger Canadian dollar, higher
fiber costs and a higher tax rate which in total reduced net income by
$0.02 per diluted share.

    
    Included in the third quarter 2007 financial results were:

        - Costs of $14 million ($8 million after tax or $0.02 per diluted
          share) related to synergies, integration and optimization; and
        - A mark-to-market gain of $6 million ($3 million after tax or
          $0.01 per diluted share) related to financial instruments.

    Included in the second quarter 2007 financial results were:

        - Costs of $7 million ($4 million after tax or $0.01 per diluted
          share)related to synergies, integration and optimization; and
        - A mark-to-market gain of $10 million ($6 million after tax or
          $0.01 per diluted share) related to financial instruments.

    "Our profit margins expanded in the third quarter with better volumes and
prices but also due to the strong operating performance of our paper, pulp and
sawmilling operations," said Raymond Royer, President and CEO. "All of our
business segments posted improved results and the momentum continues to build
with prices for paper products and for pulp trending higher and with the
benefits of initiatives aimed at delivering synergies gradually ramping up.
Also, our continued efforts to bring a proper balance between supply and our
customers' demand resulted in a significant reduction in our paper inventories
in the quarter."
    Commenting on market conditions, Mr. Royer added, "I am pleased with the
continued support we get from our customers. Clearly, with paper shipments
higher than the second quarter, we manage to maintain our leading position in
North America in spite of the overall weakness observed in market demand
year-to-date. By maintaining the same focus on building the franchise with
service solutions and an easy access to our quality products, we are
positioning the company to create significant shareholder value."

                               SEGMENT REVIEW
                                   -------

    PAPERS

    Operating income in our Papers business was $133 million in the third
quarter of 2007 compared to operating income of $92 million for the second
quarter of 2007. Depreciation and amortization in our Papers business totaled
$122 million in the third quarter of 2007. When compared to the second quarter
of 2007, sales increased 4.6% to $1.4 billion with paper and pulp shipments
increasing by 4.3% and 0.9%, respectively. Lack-of-order downtime amounted to
84,000 tons, including 18,000 tons of lack-of-order downtime taken in July on
three paper machines prior to the announcement of their closure on July 31.
Paper inventories declined 72,000 tons throughout the quarter.
    When compared to the second quarter, the increase in operating income is
the result of higher average selling prices for paper and pulp, lower costs
related to planned maintenance shutdowns and higher paper shipments. These
factors were partially offset by higher costs for purchased fiber and chips.

    PAPER MERCHANTS

    Operating income in our Paper Merchants business was $6 million in the
third quarter of 2007 compared to operating income of $2 million for the
second quarter of 2007. Sales increased 10% to $249 million while deliveries
increased 9.1%.
    When compared to the second quarter, the increase in operating income is
the result of higher deliveries, higher average selling prices and a decrease
of $2 million in the allowance for doubtful accounts.

    WOOD

    Operating loss in our Wood business was $13 million in the third quarter
of 2007 compared to operating loss of $20 million for the second quarter of
2007. Depreciation and amortization in our Wood business totaled $6 million in
the third quarter of 2007. When compared to the second quarter of 2007, sales
decreased 2% to $88 million while lumber shipments decreased 13% due to lower
buy-and-resell activities of lumber produced by third parties, offset by
higher shipments of chips and an increase of sales of premium lumber.
    When compared to the second quarter, the decrease in operating loss is the
result of lower costs as well as higher average selling prices. In the second
quarter, manufacturing costs were negatively impacted by the gradual scale
down of production at the White River, Ontario sawmill which was closed in
July. Also, Domtar successfully restarted in late June its Val d'Or, Quebec
sawmill with a new labor contract improving its unit cost competitiveness.

                                   OUTLOOK
                                   -------

    For the remainder of the year, price realizations for paper and pulp are
expected to further improve as a result of recently announced price increases
for several commercial printing paper grades and for pulp while volumes are
expected to decrease from the third quarter due to seasonal factors typifying
our business. Integration related costs are expected to continue to increase
from the third quarter while the annualized run rate from synergies is
targeted at $80 million by year-end. The strengthening in the value of the
Canadian dollar toward the end of the third quarter is expected to have a
significant negative impact on the cost structure and profitability of our
operating Canadian mills.

                           EARNINGS CONFERENCE CALL
                                   -------

    The Company will hold a conference call today at 11:00 a.m. (EST) to
discuss its third quarter 2007 financial results. Financial analysts are
invited to participate in the call by dialing 1-866-904-6251 (North America)
or 1-416-915-8321 (International), while media and other interested
individuals are invited to listen to the live broadcast on the Domtar
corporate website at www.domtar.com.

                               THE TRANSACTION
                                   -------

    Domtar Corporation started its operations on March 7, 2007 following the
combination of the Weyerhaeuser Fine Paper Business and Domtar Inc. Prior to
the completion of the Transaction, the Weyerhaeuser Fine Paper Business was
operated by Weyerhaeuser Company.
    The financial results of Domtar Corporation cover certain periods prior to
the Transaction. For accounting and financial reporting purposes, Weyerhaeuser
Fine Paper Business is considered to be the "predecessor" to Domtar
Corporation and as a result, its historical financial statements now
constitute the historical financial statements of Domtar Corporation.
Accordingly, the results reported for the second and third quarter of 2007
include the results of operations of the new Company for the entire period.
The results reported for the third quarter and the year-to-date of fiscal year
2006 include only the results of operations of the Weyerhaeuser Fine Paper
Business, on a carve-out basis, for the entire period. The results reported
for the year-to-date of fiscal year 2007 include the results of operations of
the Weyerhaeuser Fine Paper Business, on a carve-out basis, for the period
from January 1, 2007 to March 6, 2007 and the results of operations of the new
Company for the period from March 7, 2007 to September 30, 2007.

                         FORWARD-LOOKING STATEMENTS
                                   -------

    FORWARD-LOOKING STATEMENTS

    This press release may contain forward-looking statements relating to
trends in, or representing management's beliefs about, Domtar's future growth,
results of operations, performance and business prospects and opportunities.
These forward-looking statements are generally denoted by the use of words
such as "anticipate," "believe," "expect," "intend," "aim," "target," "plan,"
"continue," "estimate," "project," "may," "will," "should" and similar
expressions. These statements reflect management's current beliefs and are
based on information currently available to management. Forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by management, are inherently subject to
known and unknown risks and uncertainties and other factors that could cause
actual results to differ materially from historical results or those
anticipated. Accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will occur, or if any occurs,
what effect they will have on Domtar's results of operations or financial
condition. These factors include, but are not limited to:

    - the effect of general economic conditions, particularly in the U.S. and
      Canada;
    - market demand for Domtar Corporation's products, which may be tied to
      the relative strength of various U.S. and/or Canadian business
      segments;
    - product selling prices;
    - energy prices;
    - raw material prices;
    - chemical prices;
    - performance of Domtar Corporation's manufacturing operations including
      unexpected maintenance requirements;
    - the successful integration of the Weyerhaeuser Fine Paper Business with
      Domtar and the ability to realize anticipated cost savings;
    - the level of competition from domestic and foreign producers;
    - the effect of forestry, land use, environmental and other governmental
      regulations, and changes in accounting regulations;
    - the effect of weather and the risk of loss from fires, floods,
      windstorms, hurricanes and other natural disasters;
    - transportation costs;
    - the loss of current customers or the inability to obtain new customers;
    - legal proceedings;
    - changes in asset valuations, including write downs of property, plant
      and equipment, inventory, accounts receivable or other assets for
      impairment or other reasons;
    - changes in currency exchange rates, particularly the relative value of
      the U.S. dollar to the Canadian dollar;
    - the effect of timing of retirements and changes in the market price of
      Domtar Corporation's common stock on charges for stock-based
      compensation; and
    - performance of pension fund investments and related derivatives.

    These factors should be considered carefully and undue reliance should not
be placed on the forward-looking statements, which speak only as of the date
made, when evaluating the information presented in this document. Unless
specifically required by law, Domtar Corporation assumes no obligation to
update or revise these forward-looking statements to reflect new events or
circumstances.

    DOMTAR CORPORATION (NYSE/TSX: UFS) IS THE LARGEST INTEGRATED PRODUCER 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 PULP.
THE COMPANY DESIGNS, MANUFACTURES, MARKETS AND DISTRIBUTES A WIDE RANGE OF
BUSINESS, COMMERCIAL PRINTING, PUBLICATION AS WELL AS TECHNICAL AND SPECIALTY
PAPERS WITH RECOGNIZED BRANDS SUCH AS FIRST CHOICE(R), MICROPRINT(R), WINDSOR
OFFSET(R), COUGAR(R) AS WELL AS ITS FULL LINE OF ENVIRONMENTALLY AND SOCIALLY
RESPONSIBLE PAPERS, DOMTAR EARTHCHOICE(R). DOMTAR OWNS AND OPERATES DOMTAR
DISTRIBUTION GROUP, AN EXTENSIVE NETWORK OF STRATEGICALLY LOCATED PAPER
DISTRIBUTION FACILITIES. DOMTAR ALSO PRODUCES LUMBER AND OTHER SPECIALTY AND
INDUSTRIAL WOOD PRODUCTS. THE COMPANY EMPLOYS NEARLY 14,000 PEOPLE. TO LEARN
MORE, VISIT WWW.DOMTAR.COM.


    Domtar Corporation

    Highlights

    (In millions of US dollars, unless otherwise noted)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      Thirteen weeks      Thirty-nine weeks
                                          ended                 ended
    -------------------------------------------------------------------------
                                  September  September  September  September
                                         30         24         30         24
                                       2007       2006       2007       2006
                                  -------(Unaudited)--- -------(Unaudited)---

                                          $          $          $          $

    Selected Segment Information

    Sales
      Papers                          1,411        759      3,715      2,304
      Paper Merchants                   249          -        551          -
      Wood                               88         49        225        186
    -------------------------------------------------------------------------
    Total for reportable segments     1,748        808      4,491      2,490
      Intersegment sales - Papers       (72)        (1)      (162)        (1)
      Intersegment sales - Paper
       Merchants                          -          -         (1)         -
      Intersegment sales - Wood         (16)       (12)       (34)       (56)
    -------------------------------------------------------------------------
    Consolidated sales                1,660        795      4,294      2,433
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and amortization
     and impairment loss
      Papers                            122         74        319        222
      Paper Merchants                     -          -          1          -
      Wood                                6          3         17          7
    -------------------------------------------------------------------------
    Total for reportable segments       128         77        337        229
      Impairment loss - Papers            -          -          -        749
    -------------------------------------------------------------------------
    Consolidated depreciation and
     amortization and impairment
     loss                               128         77        337        978
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Operating income (loss)
      Papers                            133         73        296       (691)
      Paper Merchants                     6          -         12          -
      Wood                              (13)        (4)       (37)        (8)
      Corporate                          (3)         -         (8)         -
    -------------------------------------------------------------------------
    Consolidated operating income
     (loss)                             123         69        263       (699)
    Interest expense                     48          -        106          -
    -------------------------------------------------------------------------
    Income (loss) before income
     taxes                               75         69        157       (699)
    Income tax expense(1)                39         21         61         12
    -------------------------------------------------------------------------
    Net income (loss)                    36         48         96       (711)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per common share (in dollars)
    Net income (loss)
      Basic                            0.07       0.17       0.21      (2.50)
      Diluted                          0.07       0.17       0.21      (2.50)
    Weighted average number of
     common and exchangeable
     shares outstanding (millions)
      Basic                           515.4      284.1      459.6      284.1
      Diluted                         517.8      284.1      461.5      284.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash flows provided from
     operating activities               144         30        424        212
    Additions to property, plant
     and equipment                       19         12         65         53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) The combined statutory rate in Canada is approximately 31% and the
        combined statutory rate in the U.S. is approximately 40%. The
        Canadian effective tax rate of the third quarter includes an
        additional expense of $1 million related to current year non-
        deductible items. The U.S. effective tax rate for the third quarter
        includes an additional expense of $6 million. This amount includes an
        adjustment to the Company's estimate of the non-conventional fuel tax
        credits of $3 million and a $2 million provision for the U.S.
        withholding taxes payable on future distributions from the U.S.
        subsidiaries. The Canadian effective tax rate for the 39 weeks ended
        September 30, 2007 differs from the combined statutory rate due to a
        $7 million benefit related to changes in the federal income tax rate,
        out of which $6 million is related to a previously reported out of
        period adjustment. The U.S. effective tax rate includes $5 million
        related to the non-conventional fuel tax credit. The non-conventional
        fuel tax credits are subject to fluctuations in the price of oil. Due
        to the high level of uncertainty inherent in future oil prices, this
        estimate may change significantly and the Company may have to adjust
        the credit in the fourth quarter. Under current U.S. tax law, the
        sale of biomass gas will no longer generate non-conventional fuel tax
        credits after 2007. Also, the Company recorded a $4 million expense
        for U.S. withholding taxes payable on future distributions from the
        U.S. subsidiaries.


                                  -------------------------------------------
                                  -------------------------------------------
                                      Thirteen weeks     Thirty-nine weeks
                                          ended                ended
                                  -------------------------------------------
                                       September 30         September 30
                                           2007                 2007
                                  ---------------------- --------------------

    Income taxes                    Canada   U.S. Total  Canada   U.S. Total
    Income (loss) before income
     taxes                             (23)   98     75     (73)  230    157
    Income tax expense (benefit)        (6)   45     39     (32)   93     61
    Effective tax rate                  26%   46%    52%     44%   40%    39%
                                  ---------------------- --------------------
    -------------------------------------------------------------------------


    Domtar Corporation
    Consolidated Statements of Income
    (In millions of US dollars, unless otherwise noted)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      Thirteen weeks      Thirty-nine weeks
                                          ended                 ended
    -------------------------------------------------------------------------
                                  September  September  September  September
                                         30         24         30         24
                                       2007       2006       2007       2006
                                  -------(Unaudited)--- -------(Unaudited)---

                                          $          $          $          $

    Sales                             1,660        795      4,294      2,433
    Operating expenses
      Cost of sales, excluding
       depreciation and
       amortization                   1,283        605      3,418      2,023
      Depreciation and
       amortization                     128         77        337        229
      Selling, general and
       administrative                   126         44        276        131
      Impairment of goodwill              -          -          -        749
    -------------------------------------------------------------------------
                                      1,537        726      4,031      3,132
    -------------------------------------------------------------------------

    Operating income (loss)             123         69        263       (699)

    Interest expense                     48          -        106          -
    -------------------------------------------------------------------------

    Income (loss) before income
     taxes                               75         69        157       (699)

    Income tax expense                   39         21         61         12
    -------------------------------------------------------------------------

    Net income (loss)                    36         48         96       (711)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per common share (in dollars)
      Net income (loss)
        Basic                          0.07       0.17       0.21      (2.50)
        Diluted                        0.07       0.17       0.21      (2.50)

    Weighted average number of
     common and exchangeable
     shares outstanding (millions)
      Basic                           515.4      284.1      459.6      284.1
      Diluted                         517.8      284.1      461.5      284.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Domtar Corporation
    Consolidated Balance Sheets As at
    (In millions of US dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        September   December
                                                               30         31
    -------------------------------------------------------------------------
                                                             2007       2006
                                                       (Unaudited)

                                                                $          $

    Assets
    Current assets
        Cash and cash equivalents                             136          1
        Receivables, less allowances of $9 and $2             595        340
        Inventories                                         1,018        520
        Prepaid expenses                                       25          6
        Income and other taxes receivable                       9          -
        Deferred income taxes                                  62         22
    -------------------------------------------------------------------------
          Total current assets                              1,845        889

      Property, plant and equipment, at cost               10,007      6,696
      Accumulated depreciation                             (4,072)    (3,631)
    -------------------------------------------------------------------------
          Net property, plant and equipment                 5,935      3,065

    Goodwill                                                  141         14
    Intangibles assets, net of amortization                    30          -
    Other assets                                              110         30
    -------------------------------------------------------------------------
          Total assets                                      8,061      3,998
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
    Current liabilities
        Bank indebtedness                                      75          -
        Trade and other payables                              750        250
        Income and other taxes payable                         79          6
        Long-term debt due within one year                     19         12
    -------------------------------------------------------------------------
          Total current liabilities                           923        268

    Long-term debt                                          2,356         32
    Deferred income taxes                                   1,144        758
    Other liabilities and deferred credits                    426         25

    Shareholders' equity
        Business Unit equity                                    -      2,852
        Common stock                                            5          -
        Exchangeable shares                                   343          -
        Additional paid-in capital                          2,497          -
        Retained earnings                                      73          -
        Accumulated other comprehensive income                294         63
    -------------------------------------------------------------------------
          Total shareholders' equity                        3,212      2,915
    -------------------------------------------------------------------------
            Total liabilities and shareholders' equity      8,061      3,998
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Domtar Corporation
    Consolidated Statements of Cash Flows
    (In millions of US dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      Thirteen weeks      Thirty-nine weeks
                                          ended                 ended
    -------------------------------------------------------------------------
                                  September  September  September  September
                                         30         24         30         24
                                       2007       2006       2007       2006
                                  -------(Unaudited)--- -------(Unaudited)---

                                          $          $          $          $

    Operating activities
    Net income (loss)                    36         48         96       (711)
    Adjustments to reconcile
     income to cash flows from
     operating activities
      Depreciation and
       amortization                     128         77        337        229
      Deferred income taxes             (10)       (24)       (25)       (22)
      Impairment of goodwill              -          -          -        749
      Other                               1         17          2         17
    Changes in assets and
     liabilities, net of effects
     of acquisition
      Receivables                       (70)       (27)      (126)       (28)
      Inventories                         5        (19)        22         44
      Prepaid expenses                    3          3         (4)        (4)
      Trade and other payables           15        (46)        60        (63)
      Income and other taxes             37          -         68          -
      Other assets and other
       liabilities                       (1)         1         (6)         1
    -------------------------------------------------------------------------
    Cash flows provided from
     operating activities               144         30        424        212
    -------------------------------------------------------------------------

    Investing activities
    Additions to property, plant
     and equipment                      (19)       (12)       (65)       (53)
    Proceeds from disposals of
     property, plant and
     equipment                            1          -         23          -
    Business acquisitions - cash
     acquired                             -          -        573          -
    Other                                 3          -         (1)         -
    -------------------------------------------------------------------------
    Cash flows provided from
     (used for) investing
     activities                         (15)       (12)       530        (53)
    -------------------------------------------------------------------------

    Financing activities
    Net change in bank
     indebtedness                        (6)         -         (9)         -
    Issuance of short-term debt           -          -      1,350          -
    Issuance of long-term debt            -          -        800          -
    Repayment of short-term debt          -          -     (1,350)         -
    Repayment of long-term debt         (75)        (1)      (156)        (4)
    Debt issue costs                      -          -        (24)         -
    Distribution to Weyerhaeuser
     prior to March 7, 2007               -        (18)    (1,431)      (155)
    Other                                 -          -         (5)         -
    -------------------------------------------------------------------------
    Cash flows used for financing
     activities                         (81)       (19)      (825)      (159)
    -------------------------------------------------------------------------

    Net increase (decrease) in
     cash and cash equivalents           48         (1)       129          -
    Translation adjustments
     related to cash and cash
     equivalents                          8          -          6          -
    Cash and cash equivalents at
     beginning of period                 80          2          1          1
    -------------------------------------------------------------------------
    Cash and cash equivalents at
     end of period                      136          1        136          1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Domtar Corporation
    Quarterly Statistical Review

                                                              2007
    -------------------------------------------------------------------------
                                                    1st    2nd    3rd   Year-
                                                    Qtr    Qtr    Qtr     to-
                                                                        date
                                                  ---------------------------

    Total Shipments by Category
     of Products

    Papers (in thousands of
     ST)(a) - actual                                871  1,209  1,261  3,341
    Papers (in thousands of
     ST)(a,b) - combined                          1,247      -      -      -

    Market Pulp (in thousands of
     ADMT)(c) - actual                              249    330    333    912
    Market Pulp (in thousands of
     ADMT)(b,c) - combined                          355      -      -      -

    Lumber (in millions of FBM) -
     actual                                          88    227    197    512
    Lumber (in millions of
     FBM)(b) - combined                             209      -      -      -
    -------------------------------------------------------------------------

    Benchmark Prices for the
     Majority of our Products(d)

      - 20-lb repro bond,
         92 bright (copy)         ($/ton)          $930   $963   $990   $961
      - 50-lb offset, rolls       ($/ton)          $810   $810   $803   $808
      - Coated publication
         No. 5, 40-lb offset,
         rolls                    ($/ton)          $778   $748   $782   $769

      - Pulp NBSK - U.S. market  ($/ADMT)          $790   $810   $837   $812
      - Pulp NBHK - Japan
         market(e)               ($/ADMT)          $640   $640   $658   $646

      - Lumber G.L. 2x4x8 studs  ($/MFBM)          $317   $335   $336   $329
      - Lumber G.L. 2x4 R/L,
         no. 1 & no. 2           ($/MFBM)          $332   $332   $343   $336
    -------------------------------------------------------------------------

    Average Exchange Rates           CAN          1.172  1.098  1.044  1.105
                                      US          0.854  0.910  0.958  0.907
    -------------------------------------------------------------------------

                                                           2006
    -------------------------------------------------------------------------
                                             1st    2nd    3rd    4th
                                             Qtr    Qtr    Qtr    Qtr   Year
                                           ----------------------------------

    Total Shipments by Category
     of Products

    Papers (in thousands of
     ST)(a) - actual                         813    732    711    768  3,024
    Papers (in thousands of
     ST)(a,b) - combined                   1,446  1,304  1,267  1,280  5,297

    Market Pulp (in thousands of
     ADMT)(c) - actual                       207    205    180    207    799
    Market Pulp (in thousands of
     ADMT)(b,c) - combined                   342    359    352    377  1,430

    Lumber (in millions of FBM) -
     actual                                   93     47     43     40    223
    Lumber (in millions of
     FBM)(b) - combined                      349    317    274    199  1,139
    -------------------------------------------------------------------------

    Benchmark Prices for the
     Majority of our Products(d)

      - 20-lb repro bond,
         92 bright (copy)         ($/ton)   $820   $890   $950   $947   $902
      - 50-lb offset, rolls       ($/ton)   $765   $840   $850   $838   $823
      - Coated publication
         No. 5, 40-lb offset,
         rolls                    ($/ton)   $898   $895   $848   $813   $863

      - Pulp NBSK - U.S. market  ($/ADMT)   $653   $707   $757   $770   $722
      - Pulp NBHK - Japan
         market(e)               ($/ADMT)   $542   $572   $618   $637   $592

      - Lumber G.L. 2x4x8 studs  ($/MFBM)   $391   $371   $313   $302   $344
      - Lumber G.L. 2x4 R/L,
         no. 1 & no. 2           ($/MFBM)   $409   $386   $351   $327   $368
    -------------------------------------------------------------------------

    Average Exchange Rates           CAN   1.155  1.122  1.121  1.139  1.134
                                      US   0.866  0.891  0.892  0.878  0.882
    -------------------------------------------------------------------------

    (a) Figures exclude shipments made by our Paper Merchants.
    (b) Figures represent shipments to external customers on a combined
        basis, giving effect to the Transaction as if it occurred on
        January 1 of 2006 and 2007. The combined shipments figures are for
        illustrative information purposes only and are not necessarily
        indicative of the results had the Transaction actually taken place at
        the dates indicated and does not purport to be indicative of future
        results.
    (c) Figures are gross of market pulp purchased from other producers on
        the open market for some of our paper making operations. Market
        pulp represents the amount of pulp produced in excess of our internal
        requirement.
    (d) Source: Pulp & Paper Week and Random Lengths.
    (e) Based on Pulp & Paper Week's Southern Bleached Hardwood Kraft pulp
        prices for Japan, increased by an average differential of
        $15/ADMT between Northern and Southern Bleached Hardwood Kraft pulp
        prices.
    




For further information:

For further information: Media relations: Michel A. Rathier, (514)
848-5103; Investor relations: Pascal Bossé, (514) 848-5938

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Domtar Corporation

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