67th Annual Shareholders Meeting - Domtar focused on value-creation with revised strategy and strong balance sheet.

MONTREAL--(BUSINESS WIRE)--April 23, 1996--Shareholders attending Domtar Inc.'s (ME/TSE/NYSE:DTC) annual meeting were told that 1995 was a year of significant achievement.

The corporation posted record profits and revised its strategy to focus aggressively on value-creation. The result is a company well-positioned for the future.

In keeping with the revised strategy -- which keys on the pulp and forest products, fine papers and packaging sectors -- Domtar has completed the sale of its Gypsum business for U.S.$350 million. The sale of the Decorative Panels business for U.S.$94 million was also announced in February 1996.

The proceeds from these transactions have been earmarked primarily for the corporation's balance-sheet improvement program. They will also help provide the financial flexibility required to capitalize on appropriate strategic investment opportunities.

"Improved liquidity is crucial to the realization of Domtar's overall strategy of timely, profitable, long-term growth," said Pierre Fitzgibbon, Senior Vice-President and Chief Financial Officer.

"Domtar intends to maintain its financial flexibility," Fitzgibbon told the annual meeting. "We're disciplining ourselves to finance the growth of our existing businesses essentially from internally generated cash flow. This will enable us to respond to external opportunities that fit with our strategic plan."

Fitzgibbon noted that, as part of its focus on improved shareholder value, Domtar has adopted the Economic Value Added, or "EVA" concept.

EVA will complement Domtar's organizational strategy by ensuring that this focus on value is consistently reflected in the decision-making process concerning operations and capital allocation. As well, a portion of the incentive compensation of many Domtar employees is now tied to EVA.

Domtar posted record net earnings of $301 million or $2.32 per common share in 1995. That compared with net earnings of $75 million or 56 cents a common share in 1994 -- and exceeded by a considerable margin the previous record profit of $161 million posted in 1987.

Reflecting the improved fortunes, Domtar's Board of Directors in January reinstated a quarterly cash dividend on the corporation's common stock. They approved today the declaration of a dividend of $0.035 that will be paid July 2, 1996 to shareholders of record as of June 3, 1996.

Sharply lower product prices and high customer inventory levels had a negative impact on Domtar's first-quarter 1996 results. (See separate news release.) Net earnings for the three months ended March 31, 1996, were $20 million or $0.14 per common share, compared with $75 million or $0.58 per common share in the corresponding year-earlier period.

Although the sharp pricing declines experienced so far are not expected to continue, no significant improvement in market conditions is expected during the second quarter. Assuming a more balanced inventory situation and sustained economic growth, Domtar expects a better market environment in the latter part of 1996.

Domtar is a major North American manufacturer of pulp and forest products, fine papers and packaging. A leading manufacturer and marketer of printing and writing papers, Domtar is also a significant Canadian producer of containerboard and corrugated containers and a major Eastern Canadian lumber producer. -0- NOTE: See separate press release "Domtar Inc. Reports Net Earnings of $20 million in First Quarter of 1996"

CONTACT: Domtar Inc.

Pierre Fitzgibbon, 514/848-5860

INTERNET: [e-mail], or

Denis Couture, 514/848-5103

INTERNET: [e-mail]