(Reuters) - German chemicals group Evonik Industries reported a smaller than expected drop in first-quarter core profit on Tuesday, as higher prices offset some of the lost volumes in the quarter marked by muted economic activity and weak demand.

"The start to the year was even more challenging than we feared," CEO Christian Kullmann said in a statement, but added the company had seen signs of business recovery in the course of the quarter.

Evonik, whose products are used in items from animal feed and diapers to Pfizer/BioNTech's COVID-19 vaccine, posted a 44% decline in quarterly adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to 409 million euros ($450.23 million), beating analysts' forecast of 391.9 million euros in a company-provided poll.

Evonik said it expected full-year adjusted EBITDA at the lower end of its earlier forecast of 2.1 billion to 2.4 billion euros. It cited falling prices for animal feed additive methionine and for products of the C4 chain in its performance materials unit.

European chemicals firms had in March painted a bleak picture of their 2023 prospects due to the continuing fallout from Russia's invasion of Ukraine, high inflation and slowing economic growth.

Evonik is in the middle of a strategic shift towards higher-margin speciality chemicals, including its smart materials, specialty additives and nutrition & care units.

($1 = 0.9084 euros)

(Reporting by Anastasiia Kozlova and Antonis Pothitos in Gdansk; Editing by Milla Nissi)