It seems luxury goods are the first thing we cut back on when rumours of recession are circling, and top-end audio and video experts Bang & Olufsen are feeling the pinch.

The Danish company has now issued its third profit warning so far this year.

It has revealed that its pre-tax profit for its 2007-2008 fiscal year to the end of May will be around 155m kroner (£17m), down by 45m-95m kroner on its initial estimate.

B&O has, as a result of its profit warnings, suffered a 71% plunge in its share price over the past year.

"The uncertainty of the global economy has made it very difficult to foresee market developments", said the group in a statement.

In particular, there has been a decline in orders in Western Europe, where the company is facing increased competition, especially in the flat screen TV arena.

Sony and Samsung offer B&O-like flat-screen products and sleek surround-sound systems at lower prices.

"B&O's traditional selling point has been design, and it is increasingly difficult to differentiate yourself when the product is something flat that hangs on the wall", one analyst told the FT.

"Even rich people have to be in a good mood to spend money", said Peter Thostrup, B&O's executive vice-president.

"There is no doubt that in a downturn price competition gets more fierce - and competing on price is not one of our strengths", he added.