• by Joe Mandese  @mp_joemandese, November 9, 2011

Dentsu, the 110-year-old agency holding company based in Japan, released results for its first fiscal half earnings Tuesday, indicating that the Japanese advertising marketplace has stabilized following the devastating earthquake and tsunami that hit the island nation earlier this year, but cautioned that global economic conditions – and the long-term ad outlook – remain uncertain.

While Dentsu said the situation in the advertising industry “remained severe” due to the effects of the earthquake, it said “demand for advertising, particularly television spots, showed signs of recovery since the summer as clients’ supply chains were restored.”

As a result, Dentsu reported only a 0.6% decline in revenues for the six months ended Sept. 30. Not surprisingly, the effects were most negative for its domestic results. Dentsu’s revenues declined 2.7% in Japan, but rose 18.2% in other countries. Thanks to an aggressive diversification strategy, Dentsu now owns some high growth U.S. ad shops, including 360i and McGarry Bowen.

While Japan-based business still represents the vast majority of Dentsu’s net sales, other countries contributed nearly 13% during its fiscal first half.

“Although the advertising market is currently showing signs of recovery, economic trends overseas and the strong yen mean that the outlook is far from optimistic,” Dentsu said in its statement, adding that the Japan Center for Economic Research, currently predicts that Japan’s ad economy will decline 4.0% for its fiscal year ending March 31, 2012. Despite that, Dentsu predicted its net sales would rise 1.0% for the period, which is down from its previous forecast of 2.0% growth.