Evonik, the German chemicals manufacturer reported that its second quarter core profit fell 38% compared to last year, due to a difficult economic environment and weak demand.

In a statement, CEO Christian Kullmann said “Germany is in a recession, Europe as well, and the economy in China is not picking up as we had hoped,” adding that the second quarter had not shown any meaningful reversals of that trend.

Producing products that are used in goods from animal feed and diapers to vaccines for Covid-19, the company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 450 million euros ($494 million) for the quarter.

That beat analyst expectations of 447.6 million euros that had been generated by Vara Research, which was at the upper end of the outlook range of Evonik, at 430 million to 450 million euros.

As Europe sees the end of cheap Russian pipeline gas deliveries, and an overall inflationary environment, the energy-intensive chemical sector which serves Germany’s vital industrial sector is seeing order volumes plummet as customers reduce their stocks due to reduced demand for their products.

The company reaffirmed full-year core profit expectations would be between 1.6 billion and 1.8 billion euros, with no recovery in sight all through the second half of the year.

Several chemical companies in Germany, where the cost of energy is among the highest in all of Europe, have trimmed their forecasts in the last two months, including industry leader BASF.