to shareholders NOVEMBER 2005

Dearshareholders,O ur results for the first half of fiscal year

2005/06 are satisfactory, as theyclearly demonstrate that ALSTOM is

now reaching its final stage of recovery: ourMarch 2006 targets, announced in March 2003when we launched our action plan, had already beenachieved at the end of September 2005, i.e. 6 monthsahead of schedule. Operating margin reached 5%;factoring in IFRS accounting changes (difference of-1.3% between IFRS and French GAAP), this levelof 5% is ahead of the 6% operating margin targetset for year-end 2005/06, which was statedpreviously in French GAAP. After 5 consecutivesemesters of losses, net income was positive at€136 million, as a result of better operational per-formance and lower restructuring and financialexpenses. Free cash flow was also positive.

ALSTOM has also further reinforced its commercialand financial visibility during the period. On thecommercial side, our order intake stood at a soundlevel of €7.5 billion at the end of September 2005,with an increase in both Power and Transport Sectors.Since October, a number of gas power plant projectsincluding 6 gas turbines have been awarded inItaly, Germany and Argentina. In Transport, wereceived a large order for an automatic metro linein Paris. Finally, in Marine, the letter of intent signedin June 2005 for 2 cruise-ships, has recently comeinto force with the booking of the order worth over€1 billion.

In terms of finances, ALSTOM’s balance sheet hasstrengthened over the period. Successful negotiationshave been completed for a new bonding programmewith 18 banks for a syndicated amount of

€9.3 billion, which should allow the Group to coverits needs until July 2008. Lastly, ALSTOM has madeconsiderable progress in its disposals programme:all the activities which had been identified for dis-posal, as part of the commitments taken with theEuropean Commission, are now either sold or in theirclosing phase.

Based upon the good progress of our action plansand the positive results of the first half year, we canconfirm that the Group is expected to meet or exceedthe targets previously set for the full year 2005/06:operating margin should be at least at 5%, netincome should exceed €250 million and free cashflow should be positive.

Beyond the current fiscal year, ALSTOM should bein a position to enter a new phase of profitablegrowth. We aim to further improve our operationalperformance, targeting a 6% to 7% operating mar-gin in March 2008 which should lead, combinedwith a strict management of our working capital, toa substantial increase of our free cash flow and thusto a further reduction of our debt.

I wish to thank you for your patience and your sup-port throughout the difficulties of the past few years.I am now convinced that they will be rewarded asthe Group fulfills its recovery and enters this newphase of development.

●

➤ March 06 targetsachieved 6 months aheadof schedule:

– Income fromoperations more thandoubled, leading to anoperating marginof 5% (ahead of year-end2005/06 target)

– Net income positiveat €136 million

– Free cash flow positiveat €115 million

➤ Sound level of ordersat €7.5 billion

➤ Higher sales, up 12%from first half 2004/05(on a comparable basis)

*Expressed for the first timeunder IFRS (International FinancialReporting Standards).

Improved first halfresults 2005/06*

Patrick KronChairman & CEO

ORDERS RECEIVED(in € million)

Order intake stood at €7.5 billion or a10% decrease versus last year. How-ever, excluding the Marine Sector,which recorded an order for 2 cruise-ships last year during the first half,orders increased by 4%.

●

Electrical equipmentin IndiaALSTOM is to supply hydroelectricequipment for the Subansiri HydroPower project in Assam, India. At2,000 MW, this €265 million turnkeyproject is the biggest hydroelectricproject ever undertaken in thecountry.

●

GT13 E2 Turbinesin AustraliaALSTOM has won a €130 millioncontract for the turnkey supply of anopen-cycle power plant in Australia.The 450 MW plant will use 3 GT13E2 turbines.

●

Conventional island forthe Ling Ao nuclearpower station in ChinaALSTOM and Dongfang ElectricGroup Corporation are to supply 21,000 MW Arabelle steam turbineand generator packages for phase IIof construction at Ling Ao nuclearpower station in the Chinese provinceof Guangdong. ALSTOM’s share inthe project is worth €80 million.

●

GT26 order in ItalyENERGIA SPA has entrusted ALSTOMwith a €350 million contract for theturnkey construction of, andmaintenance services for, an800 MW combined cycle powerplant in southern Italy. This projectincludes 2 GT26 gas turbines.

●

GT26 order in GermanyRWE POWER AG has awarded toALSTOM the order for the permittingengineering, as a first part of aturnkey project of a 850 MW gasfired combined cycle power plant atLingen, Germany. An optional secondpart of the contract covers the supplyand erection of the plant as well as atwelve year service agreement.

COMMERCIALNEWSPOWER

+4%ExcludingMarine

1,101

7,176

H12004/05

EXCLUDINGMARINE

MARINE

*order of over €1 billion to be booked in H22005/06 for Marine.

SALES(in € million)

Sales at €6.9 billion were up 12%,reflecting last year’s rebound of ordersparticularly in the Power Turbo-Systems/Power Environment Sector (up 33%).

+12%

6,195

H12004/05

6,938

H12005/06

7,454*

H12005/06

First half resultsalready at year-end2005/06 targets Nota: Orders, sales and income from operations are presented on a comparable basis(same scope and exchange rates).

INCOME FROM OPERATIONS(in € million)

Income from operations has more thandoubled, representing a 5% operatingmargin, which is ahead of the 6% tar-get, stated previously in French GAAP(the difference between IFRS and FrenchGAAP representing -1.3%). A strongimprovement has been recorded in allSectors, reflecting the combined effectsof a higher level of sales, a more com-petitive cost base and an improvementin project execution.

COMMERCIALNEWSTRANSPORT

NET INCOME(in € million)

A net prof i t has been regis teredfollowing 5 consecutive loss-makingsemesters. It derives from the higheroperational performance and lowerfinancial and restructuring costs.

FREE CASH FLOW(in € million)

In spite of the negative impact ofMarine’s working capital, the free cashflow is significantly improved comparedto last year.

x 2.7

128H1

2004/05

347

H12005/06

-242

H12004/05

136H1

2005/06

-283

H12004/05

115H1

2005/06

1.7

1st Apr.2005

1.230th Sep.

2005

NET DEBT(in € billion)

This positive free cash flow combinedwith the proceeds from disposals havecontributed to a new decrease in netdebt.

●

Delivery of the firsttramset for the ParistramlineOn the 12th October in Paris, thefirst tramset from the Maréchauxtramway completed an initial testrun across grass-covered tracks.

●

Double-deck carsand Duplex TGV trainsin FranceThe SNCF has ordered 66 ALSTOMdouble-deck cars for regionalexpress trains. The €130 millionfollow-on order corresponds to anoption in a contract signed in 2000for 629 cars.The SNCF has also placed twoorders worth a total of €550 millionwith ALSTOM for the supply of28 TGV duplex trainsets and 8 TGVpower cars for the TGV Est network.

●

Caracas metroFRAMECA, an ALSTOM ledconsortium, has been awarded aturnkey contract worth €204 millionfor the Caracas metro in Venezuela.ALSTOM’s share in this project isabout €90 million.

●

Santiago metroAs part of the extension programmefor line 2 of the Santiago metro inChile, ALSTOM has won a contractworth a total of €110 million.

MAR-05JAN-05 MAY-05 JUL-05 SEP-05

45

40

20

25

30

35

ALSTOM SBF 120

●Key datesin the 1st semester 2006.

1 2 t h J A N U A RY 2 0 0 6Orders and sales for the 3rdquarter of fiscal year 2005/06

6 t h A P R I L 2 0 0 6Shareholders' information meetingin Montpellier

1 7 t h M AY 2 0 0 6Annual results for fiscal year2005/06

28 t h JUNE 2006Annual General Meeting

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SHAREHOLDERDIARY

Update on shareholder structureHaving completed a shareholder surveyin June 2005, we are now able to provideyou with a broad structure of ALSTOMshareholders.The following graphs represent the distri-bution of our shareholders by categoryand by geographical area.

Tour of the La Rochelle siteOn the 5th October, over 50 individualshareholders visited the Aytré-La RochelleTransport site. This guided tour wasorganised by the Investor Relations team.Fo l lowing a br ie f presen ta t ion ofALSTOM’s situation and of the site’s activ-ities, the guests were able to visit the TGVDuplex car and the Citadis tram assemblylines. The participants greatly appreci-ated the opportunity and were impressedby both the technology employed and theknow-how of the employees.

SHAREHOLDING

Please contact the InvestorRelations Department shouldyou have any enquiries orsuggestions:

BY PHONE

+33 (0)1 41 33 08 58

BY E-MAILinvestor.relations@chq.alstom.com

BY MAIL

3, avenue André-Malraux92309 Levallois-PerretFrance+33 (0)1 41 49 20 00

INTERNETwww.alstom.com(general information)Section “Investors” for financialinformation

Contact

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SHARE PRICE EVOLUTION SINCE JANUARY 2005in €

INSTITUTIONALINVESTORS57%

BY SHAREHOLDER CATEGORY

FRENCH STATE 21%

EMPLOYEES1%

INDIVIDUALSHAREHOLDERS

21%

FRANCE64%

BY GEOGRAPHICAL AREA

EUROPE (NON-FRENCH)24%

NORTH AMERICA11%

REST OFTHE WORLD

1%