First half results 1999/2000, 1 April - 30 September
1999

· Sustained high level of order intake


· Solid growth in sales


· Continued growth in operating income and margin


· Financial consequences of strategic repositioning fully
accounted

Key Figures

For basis of presentation, see Explanatory Notes on page 12.

Key Figures excluding Energy

Commenting on the results presented to the Board on 22 November
1999, Pierre Bilger, Chairman and Chief Executive Officer of
ALSTOM stated:



'
During this First Half, ALSTOM's strategic repositioning has
neared completion with significant progress made in both the
fields of Energy and Industry. The financial consequences
arising from these moves have been fully accounted for in the
Company's results.

Operating performance has continued to improve, with
ALSTOM's wholly-owned businesses recording even greater
progress than the overall reported level.

Globally speaking, for the full year, we expect to see a
further strengthening of our order book and a new step forward,
within our wholly-owned businesses, in terms of operating
income. This leads us to confirm our 6% operating margin target
for 2001/02.'

Global Review


Energy Repositioning


During the First Half 1999/00, ALSTOM completely repositioned
its Energy Sector by way of two simultaneous and clearly
associated transactions. On the one hand, the heavy duty gas
turbine business was sold to GE; on the other hand, the
remaining Energy Sector businesses were regrouped with the
power generation activities of ABB to form a joint company, ABB
ALSTOM POWER.



To complete these transactions, ALSTOM paid to ABB a lump sum
of approximately 1.48 billion corresponding to the
difference in size of the two contributed businesses and taking
into consideration the value of the heavy duty gas turbine
technology contributed by ABB. Simultaneously, ALSTOM received
a net consideration of approximately 820 million from
GE, leading to a capital gain of 604 million. Both
transactions were completed at the end of June 1999.



As a result of the in-depth project review undertaken by the
management of ABB ALSTOM POWER, the joint company, whose
financial year runs from January to December, recorded during
its first quarter of operations, an exceptional pre-tax charge
of 637 million, mostly relating to circumstances
existing at the time of the contributions made by the two
shareholders. In this context, ALSTOM has initiated the dispute
resolution procedure provided for in the joint venture
agreement.




The financial consequences of the whole strategic repositioning
of the company, mostly in the Energy field, are fully accounted
for in the First Half, partly in the opening balance sheet and
partly by an exceptional charge and are the main contributing
factors leading to an exceptional net gain of approximately
88 million before tax (158 million after tax).



Orders and Sales

Breakdown by Sector

* orders received or sales made by ALSTOM Network




During the First Half ended 30 September 1999, ALSTOM received
orders amounting to 8 214 million, an increase of 12%
compared to the same period last year.



Excluding Energy, orders have increased by 3% above the already
high level of orders received in the First Half 1998/99. This
increase is primarily the result of the continuing strong
performance in Transport and Marine and of the steady growth of
Contracting, particularly in France and Benelux countries.



The overall increase of 12% is triggered by the impact of the
inclusion of 50% of ABB ALSTOM POWER from 1 July onwards. In
its first quarter of operations, ABB ALSTOM POWER (100%) has
recorded orders worth almost 3 billion which compared to
full year combined 1998 of 10 billion shows a strong
positive trend.



Consolidated Net Sales in the First Half amounted to 7
531 million, an overall increase of 17% compared to the same
period last year, and an increase of 16% compared to the same
period excluding Energy sales. The increase in ALSTOM
wholly-owned businesses is driven primarily by Transport and
Marine, as a result of the high growth in orders recorded by
these two Sectors over the past two years.

Breakdown by Geographic Region excluding Energy

Breakdown by Geographic Region including Energy

Excluding the impact of the inclusion of ABB ALSTOM POWER with
industrial and commercial presence in 100 countries worldwide,
ALSTOM has recorded an increase in activity in its domestic
market, Europe, during the First Half (+9% in orders received,
+ 11% in sales compared to First Half 1998/99).



In France and Germany orders have increased across the Sectors.
This is the result of continuing investment in public rail
transport leading to new high speed train and suburban
double-deck train orders in France and an order for 110 EMUs
for Deutsche Bahn as well as an increase in investment in
electrical distribution networks, particularly in Germany,
leading to new orders for Transmission & Distribution and
the healthy economic situation in France leading to an increase
in orders for Contracting.



In UK by contrast, whilst Transport order intake remains at a
high level, investment in the sector has slowed down due to the
effect of the franchise cycle and the timing of new projects
and Transmission & Distribution has continued to see a low
level of investment in its field during the First Half.



The decrease in orders received in the Americas (-15%) is the
result of an absence of new cruise ship contracts in that
region during the First Half. Transport continues to increase
its market penetration in the region with orders registered
during the period including metro trains in Brazil, metro cars
for Argentina, and refurbishment work in USA.



In Asia-Pacific, orders have increased by 8% mainly as a result
of continued growth in Australasia. Transmission &
Distribution continues to suffer the impact of the low level of
investment in Asia and Transport orders were down compared to
the exceptionally high level of orders received in Asia in the
First Half 1998/99 which included the Singapore metro order,
alone representing approximately 135 million.



Including Energy, orders in Asia-Pacific have increased by 87%.
This is the result of two major orders recorded during the
period : Wai Gao Xiao, China (2 x 900 MW advanced supercritical
boilers) and Manjung, Malaysia (3 x 660 MW coal-fired power
plant). By contrast, a lower level of large Energy orders were
recorded in Europe during the First Half.


Operating Income and Margin

Operating Income amounted to 365 million, an overall
increase of 25% compared to the same period last year.



Excluding Energy, the performance of ALSTOM's wholly-owned
businesses was greater than the overall reported level, with an
operating margin of 5.1%.



This increase is the combined result of the strategic
development of activities in the higher growth, higher margin
potential market segments (eg signaling in Transport, energy
management systems and network protection in Transmission &
Distribution, and services in general) as well as the continued
success of the Company's efficiency improvement efforts, in
particular the on-going programme of restructuring and
continuing positive results from STRETCH 30, ALSTOM's
purchasing cost reduction programme.



Energy's operating performance was affected by the lower than
expected level of operating income of ABB ALSTOM POWER during
its first quarter of operations primarily linked to
circumstances which have lead to the post-closing adjustments.



Net Income

At 314 million, Net Income before goodwill increased by
77% compared to the First Half 1998/99.



This includes an exceptional pre-tax net gain of 88
million (158 million after tax) resulting from the
disposal of the Heavy Duty Gas Turbine business and after
providing for ALSTOM's 50% share of restructuring provisions
set up in the opening balance sheet of ABB ALSTOM POWER, as
well as adequate provisions to cover costs and risks relating
to the repositioning of the Comapny, mainly in the field of
Energy.



Financial income decreased significantly due to the inclusion
last year of financial income from cash subsequently paid to
the founding shareholders in the form of a special dividend
prior to IPO. The financial income of 2 million recorded
in the period includes 19 million relating to foreign
exchange gains.



Following an exceptionally low level during the same period
last year (16 million), restructuring costs returned to
a more normal higher level of 47 million in First Half
99/00, a translation of the Company's on-going rationalisation
programme. Other expenses mainly include pension costs and
employee profit sharing.



The lower than usual tax rate of 12.3%, 9.3% excluding the
amortisation of goodwill (87 million) reflects the
non-taxable capital gain and the tax deductible nature of
certain provisions. The effective tax rate after adjusting for
this impact would be 37.5%, falling to 28.3% excluding the
amortisation of goodwill.



Balance Sheet


At 30 September 1999, shareholders' equity amounted to
1 752 million, 1 793 million including minority
interests. The increase compared to the situation at 31 March
1999 is due to the combined effect of the increase in net
income reduced by the approval at the Annual General Meeting
held on 7 September 1999 of a final dividend for the 1998/99
financial year amounting to approximately 107 million.



The creation of ABB ALSTOM POWER has led to 1 668
million of additional goodwill. This figure is provisional and
subject to change when the valuation of the assets and
liabilities contributed to the opening balance sheet of the new
joint company has been fully reviewed and approved by the two
shareholders, through the dispute resolution procedure provided
for in the joint venture agreement.



At 4 839 million, provisions have increased since March
1999 due to the effect of the inclusion of ABB ALSTOM POWER,
both the consolidation of a higher level of provisions from the
joint company than formerly consolidated for ALSTOM's Energy
Sector as well as the inclusion of ALSTOM's 50% share of the
additional, exceptional provisions set up for risk and
restructuring. Excluding Energy, the level of provisions has
remained stable.



Taking into account long-term deposits of 261 million,
the Company had net debt at end September of 1 009
million leading to a ratio of net debt/market capitalisation of
17% and a gearing of 56%.



Cash Flow


Cash decreased during the First Half by 1 039 million
primarily due to the net cash outflow resulting from the
transactions in the Energy field as well as a number of smaller
acquisitions during the period including the acquisition of
Missenard Quint Climatique in Contracting and the acquisition
of Télécité Inc in Transport. Capital
expenditure amounted to 178 million.



Cash flow from operations remained flat during the period. It
should be noted that operations are traditionally less cash
generative during the First Half than the Second Half.




Human Resources


As at 30 September 1999, ALSTOM directly employed a total of 93
500 people worldwide as compared to 113 707 people at 31 March
1999. A decrease of 21 000 employees was recorded during the
First Half as a direct consequence of the repositioning of the
Energy Sector including approximately 18 000 employees
transferred to ABB ALSTOM POWER.



Excluding Energy, over 4 500 employees left the Company during
the First Half as a direct result of restructuring programmes
whilst a similar number of new recruits joined the Company,
particularly to re-inforce the increase in services and
software-oriented activity.



The Full Time Equivalent headcount at 30 September stood at 91
250 employees. This takes into account the effect of part-time
contracts and employees working within progressive
pre-retirement plans. This is the basis ALSTOM shall use going
forward to report headcount as it better reflects the effective
activity of the workforce.

Outlook

For the full year 1999/00, management expects a continuing
strengthening of the order book, primarily resulting from the
inclusion of ABB ALSTOM POWER.



In terms of operating performance, altogether ALSTOM's
wholly-owned businesses are expected to report progress
compared to the level recorded last year.



ABB ALSTOM POWER has targets to achieve margins of 3-4% in its
first full year of operations and 7-8% in the medium term.



ALSTOM confirms its 6% operating margin target for 2001/02
announced at the time of the Company's flotation in 1998.

Comments by Sector
Transmission & Distribution


The 8% and 3% decreases in orders received and sales
respectively in T&D in the First Half 1999/00 as compared
to the First Half 1998/99 are the result of continued low
levels of investment in Asia and in UK. primarily affecting the
transmission equipment and systems business.



By contrast, in the distribution business there has been
increased activity, particularly in France and Germany with
Transmission & Distribution recording more than 10% growth
in orders in this field.


Major orders recorded during the First Half include HV
equipment in Dubai and substations in Brazil and Mexico.



To better address customer requirements in a rapidly changing
market environment characterised by privatisation and
deregulation, Transmission & Distribution has, during the
First Half, implemented a new market-oriented organisation.
This new structure simplifies the former structure, regrouping
the original product-based businesses into three new businesses
: Transmission, Distribution and Protection & Control and
including the start-up of two new businesses Network
Planning and Development and Network Services extending the
scope of T&D's global solutions offer.



Continuing its strategy to focus on higher growth, higher
margin potential market segments, Transmission &
Distribution has created a joint venture company with Brazilian
partner, Light, in the field of specialist technical
maintenance services for electrical equipment and
installations. In addition, the Company announced the
acquisition of French lightning arresters specialist,
Soulé. Transmission & Distribution's US subsidiary
continues to enjoy success in the field of energy management
systems with the award of a 16 million order from Kepco,
Korea for a complete energy management system. ALSTOM is leader
in the North American market for energy management systems.


Transport


First Half 1999/00 was another successful period in terms of
order intake for Transport which recorded a further 6% increase
in orders received on top of last year's already high level.



12% growth was recorded in Europe, particularly in France with
orders for 12 double-deck high speed trains and 12 double-deck
suburban trains and in Germany where Deutsche Bahn placed an
order for 110 EMUs. Order intake in UK, still the first country
by destination for Transport orders, whilst remaining at a high
level, decreased compared to the same period last year as a
result of the franchise cycle and the timing of new projects.
Orders awarded in UK include 352 propulsion systems for Cross
Country Mainline and 6 DMUs for First Group.



Transport continues to extend its world coverage and penetrate
new markets. Orders increased in the Americas and include 80
metro cars for Buenos Aires, the first rolling stock order for
ALSTOM in Argentina and 10 metro trains for Fortaleza, Brazil.
The project for Caracas Metro Line 4 (Venezuela) was confirmed
during the period but has not yet been registered in the order
book. Transport orders in Asia decreased in the First Half
compared to an exceptionally high level of orders received in
the same period last year which included the order for the
Metro of Singapore. Orders won but not yet registered in the
order book include 100 locomotives for Iran and the rolling
stock order for Shanghai Metro Line 3.



Transport also continued its focus on higher growth, higher
margin market segments, and in particular signaling and
services. In Australia, ALSTOM was awarded a contract by the
State of Victoria Government for the supply and maintenance of
58 suburban trains, the maintenance and refurbishment of the
existing fleet and the upgrade of the network signaling system.
This contract has not yet been recorded in the order book.



In line with ALSTOM's accounting principles, long-term
Transport maintenance contracts are not included in the order
book. Today, these represent an approximate additional
3.5 billion of signed contracts.



Transport sales increased by 35% as compared to the First Half
1998/99 as a result of the high order intake of the past two
years. Major deliveries during the First Half include commuter
trains for Deutsche Bahn, Double-deck commuter trains for
Portugal, 10 metros for Athens, 8 tilting trains for Amtrak and
3 complete high speed train sets for Korea. A significant
increase in service sales was also registered during the
period.


Industry


During the First Half, the Industrial Systems and Services
business and a number of Overseas subsidiaries were transferred
from Industry to Contracting. The mechanical effect of this
transfer has led to a 20% decrease in orders received and 17%
decrease in sales for Industry compared to the same period last
year. On a comparable basis, excluding the effect of the
transfer, orders increased by 10% with major orders received
for coal and ash handling systems for Ho Ping power plant in
Taiwan and Tianjin port in China as well as an automotive
painting system order for Peugeot in Brazil.



Despite the two exceptional contracts in Asia, investment in
industrial activities in the region remains at a low level.
Diesel engines at the large end of the range are particularly
affected by this trend. Elsewhere, market conditions are
difficult with continued low levels of activity particularly in
the oil & gas and metals markets.



During the First Half, progress has continued on the refocusing
of ALSTOM's Industry Sector with the conclusion of agreements
to dispose of three activities - gears, painting systems and
nuclear valves bringing the total of businesses sold or
for which sales agreements have been signed to approximately
400 million of sales since the launch of the
restructuring programme. ALSTOM confirms its objective of
850 million of sales for disposal by April 2000.


Marine


Orders received in Marine continue to grow with an increase of
12% in the First Half compared to the same period last year.
Orders booked include one cruise ship for Festival as well as 2
frigates for Morocco. At 30 September 1999, Marine's order book
contained 12 cruise ships for delivery before 2003. The order
for 4 cruise ships (of which 2 are options) awarded to the
shipyard by new customer P&O has not yet been registered in
the order book.



Sales have increased by 119% as a result of the successful
delivery or completion of three cruise ships during the period,
two for Renaissance and one for Festival.


Contracting


The 24% and 18% increase in orders received and sales
respectively includes the effect of the transfer of the
Industrial Systems and Services business and Overseas
subsidiaries from Industry to Contracting during the period.



The transferred businesses add a new global dimension to the
Contracting Sector bringing complementary competences in
project management and industrial maintenance as well as access
to new market segments, namely water and oil & gas.



Excluding the transferred businesses, orders received increased
by 3% and sales by 1% as a result of the continuing economic
improvement in Western Europe leading, in particular, to
increased activity in France and the Benelux countries.



Major orders received during the First Half include an order
for facility management services in Belgium and a project for
rural electrification in Morocco.



During the period, Contracting continued its strategic
development of higher growth, higher margin potential
activities with the acquisition of French climate-control
engineering specialist, Missenard Quint.

*


* *
Explanatory Notes : Basis of Presentation


1. First Half 1998/99 figures have been restated to include the
breakdown of the former Cegelec businesses, acquired by ALSTOM
in May 1998 and have been converted from ECU to EURO based on
the following exchange rates :


· For the Income Statement :

1 ECU = 0.151121 FF and 1 FF = 0.152449 EURO

· For the Balance Sheet :

1 ECU = 0.151504 FF and 1 FF = 0.152449 EURO

2. First Half 1999/00 Energy figures include for the period 1
April 30 June 1999, 100% of ALSTOM's Energy Sector,
still including the heavy duty gas turbine business sold to
General Electric on 25 June and the remaining businesses
contributed to the new joint company, ABB ALSTOM POWER on 30
June 1999, and for the period 1 July 30 September, 50%
of ABB ALSTOM POWER. For the first time, therefore, from 1 July
50% of ABB ALSTOM POWER results, consolidated proportionally,
are included in the ALSTOM figures and represent 1 453
million in orders, 1 214 million in sales and 31
million in operating income. As a reminder, ABB ALSTOM POWER's
financial year runs from 1 January to 31 December.



3. Within the Industry Sector, disposed businesses are included
in the perimeter of consolidation until the date of disposal.
The figures presented for First Half 1999/00, therefore, still
include the Painting Systems activity and the Nuclear Valves
activity (ALSTOM Velan) for which sales agreements have been
concluded.



4. On 1 April 1999, two businesses Industrial Systems
and Services and Overseas subsidiaries were transferred
from Industry to Contracting. This has had the effect of
decreasing the Industry Sector orders by approximately
190 million and sales by 170 million and
increasing the Contracting figures by the same amount.

* *


'Safe Harbor' statement under the United States Private
Securities Litigation Reform Act of 1995 :



'This 'Management Discussion' contains 'forward looking
statements' as that term is defined in the United States
Private Securities Litigation Reform Act of 1995 including
those statements under the heading 'Outlook' and others
elsewhere relating to market forecasts and the Company's future
performance and business and financial plans. These 'forward
looking statements' are based on the Company's current
expectations and assumptions. However such statements are
subject to certain known and unknown risks and uncertainties
and actual results may differ materially from those anticipated
in the forward looking statements. These include, in most
cases, with respect to both ALSTOM and ABB ALSTOM POWER,
without limitation the inherent difficulty of forecasting
future market conditions, costs and/or cost savings at certain
times and/or in certain markets, timing of completion of the
strategic repositioning in the field of Industry and the risks
and other uncertainties listed from time to time in ALSTOM's
public filings, including but not limited to the 'Risk Factors'
which impact the Company and ABB ALSTOM POWER business or
operations contained in ALSTOM's Prospectus dated June 22, 1998
filed with the French COB and the United States Securities and
Exchange Commission in connection with ALSTOM's initial
offering'.